Forward looking Budget 2025 that plays on the China+1 strategy: Analysts

Budget 2025 Analysis: No income-tax up to Rs 12-lakh income, subject to conditions, according to experts, can fuel consumption in the months ahead

Budget 2025: Even though the overall market reaction to the proposals on the Budget 2025 day has been mixed with the frontline indices being muted and gains in select pockets, analysts believe that the Finance Minister Nirmala Sitharaman has played on the front foot this time around.

 

The biggest boost, according to them, has been for the consumption sector that benefited from rejigging income-tax (I-T) slabs and rates. No income-tax up to Rs 12-lakh income, subject to conditions, according to experts, can fuel consumption in the months ahead.

 

Focus on Indian manufacturing in Budget 2025 proposals, according to U R Bhat, Co-founder and Director, Alphaniti Fintech, has come at a time when global economies, especially China, could face stiff tariffs under the Trump 2.0 administration in the US.

 

“Focus on manufacturing of electronics, toys and footwear in Budget 2025 proposals has been a master stroke by FM Sitharaman. These three sectors are one of the biggest export baskets of China to the US. With the US likely to impose more tariffs on the world, and especially China going ahead, it is a prudent strategy for the government to focus on manufacturing here and take advantage of the situation. It is a forward looking budget with focus on China + 1 strategy,” Bhat said.

 

The Budget 2025, meanwhile, has proposed to make India a global hub for toys. The government plans focus on development of clusters, skills, and a manufacturing ecosystem that will create high-quality, unique, innovative, and sustainable toys that will represent the 'Made in India' brand.  Also Read: Budget 2025: Leather, footwear stocks zoom on FM Sitharaman's new policy

 

For the footwear and leather sector, the government plans to implement a focus product scheme, which will support design capacity, component manufacturing, and machinery required for production of non-leather quality footwear, besides the support for leather footwear and products.

 

"From a market standpoint, tax cuts for the middle class augurs well for consumption oriented sectors, although capex support has been a bit moderate this time,” said Shiv Sehgal, President and Head, Nuvama Capital Markets.

 

At the bourses, action remained stock specific. Stocks from the footwear sector such as Relaxo Footwear, Liberty Shoes and Campus Activewear surged up to 9 per cent post the Budget 2025 proposals. Among leather-related stocks, Mirza International was the top gainer that rallied 20 per cent in intra-day deals. Haryana Leather Chemicals, Super Tannery were among the other notable gainers.

 

Budget 2025 proposals, according to Manish Jain, chief strategy officer for institutional business at Mirae Asset Capital Markets, are positive for fast moving consumer goods (FMCG), consumption, retail, realty, auto and new-age companies; though not as much positive for banking.

 

“The budget delivers on the expectations of the Triveni Sangam of reduction in fiscal deficit, support to urban consumption through tax cuts, and an increase in Capex through allocations to the center, states, and public sector undertakings (PSUs),” said Nilesh Shah, managing director, Kotak Mahindra AMC.