Analysts pick sectors and stocks to invest in after Budget 2025; check list

Budget 2025: Budget announcements related to income tax reforms, consumption and agriculture production boosts, and so on were highlighted in the presentation

Budget 2025 Srock Market Analysis: Indian Finance Minister Nirmala Sitharaman on Saturday, February 1, 2025, presented the Budget 2025. The Budget announcements included income tax reforms, consumption, agriculture production boost, and so on. Post the budget, analysts expect consumption, capital goods, and other sectors to benefit.

Here's what Budget 2025 means to the Indian stock markets: 

Pranav Haridasan, MD & CEO, Axis Securities 

This budget is particularly positive for consumer and consumption-driven stocks, which have underperformed recently but now stand to benefit from a demand revival. Financials also present a strong opportunity, acting as a key proxy for economic growth. With the recent correction in both sectors, they offer significant value for investors.

 

Shiv Sehgal, President & Head, Nuvama Capital Markets

The Union Budget has played a balancing act amid the competing objectives of maintaining fiscal prudence and supporting demand in the economy. Accordingly, while the fiscal deficit would shrink further, the FM has provided a consumption boost by lowering tax rates for the middle class. From a market standpoint, tax cuts for the middle-class augur well for consumption-oriented sectors, although capex support has been a bit moderate this time.

 

Gaurav Dua, SVP, head - capital markets strategy, Mirae Asset Sharekhan

The three key Budget expectations included the 3Cs of Capex, Consumption and Creation of jobs. The measures taken to boost consumption and provide relief to weaker sections of society have left little headroom with the government for capex allocation. Hence, it is not surprising that the capital goods, engineering (including defence, railways), and infrastructure companies are sulking post the Budget whereas the consumption-driven stocks are fairing well in today’s trade. We retain our view that the year 2025 will be marked with correction in broader markets (SMID space) and sector rotation in favour of IT Services, Pharma, FMCG, and some select banks.

 

Sonam Srivastava- founder and fund manager, Wright Research PMS

The Union Budget 2025-26 presents a balanced approach between growth-driven initiatives and fiscal prudence, making it a critical factor in determining Foreign Institutional Investor (FII) flows in the coming months. The government’s continued emphasis on infrastructure development, MSME support, tax rationalisation, and policy reforms could enhance investor confidence and attract foreign capital inflows.

 

Anirudh Garg, partner and fund manager, Invasset PMS

The decision to forgo Rs 1 lakh crore in direct taxes and offer full tax exemption up to Rs 12 lakh income under the new regime is expected to boost consumer spending, benefiting sectors such as fast moving consumer good (FMCG), automobiles, and retail. The increased capital expenditure (Rs 11.1 lakh crore) signals a continued push for infrastructure development, benefitting companies in the construction, cement, and steel sectors. Additionally, the government’s support for domestic electronics manufacturing, nuclear energy expansion, and MSME growth should create more investment opportunities in these industries. The push for urban infrastructure, medical education, and MSME support is likely to attract long-term investments, benefiting banking and financial services sectors.