Indian Stock Market Reacts to Budget 2025
As the Indian stock market gears up for the highly anticipated Budget 2025, investors are keenly observing the movements of the BSE Sensex and Nifty50. The market opened positively, with both indices starting the day in the green. However, as the day progressed, the mood shifted, leading to a decline in the afternoon session. This article delves into the market’s performance, the expectations surrounding the budget, and the implications for investors.
Market Performance on Budget Day
On the morning of the Budget 2025 trading session, the BSE Sensex opened above 77,700, while the Nifty50 crossed the 23,500 mark. This initial surge reflected optimism among investors. However, by midday, the situation changed dramatically. The BSE Sensex fell by 300 points, trading at 77,296.03, a decrease of 204.54 points or 0.26%. Similarly, the Nifty50 dropped to 23,473.75, down 34.65 points or 0.15%.
The market’s volatility can be attributed to global concerns, particularly regarding potential tariff threats from former U.S. President Donald Trump. Investors are closely monitoring these developments as they await Finance Minister Nirmala Sitharaman’s proposals. The budget presentation is scheduled for 11 a.m. IST, and many are hopeful for income tax reductions that could stimulate domestic spending.
Despite the initial optimism, the market has faced challenges since the last budget on July 23, with the Nifty declining by 4%. Mid-cap and small-cap indices have also suffered, falling by 4.6% and 8.1%, respectively. These declines reflect concerns over reduced economic growth and its impact on corporate performance and foreign investment interest.
Expectations from Budget 2025
Analysts have high expectations for Budget 2025, particularly regarding growth measures. The Economic Survey forecasts India’s GDP growth for FY26 to be between 6.3% and 6.8%, aligning with the current fiscal year’s projection of 6.4%. Investors are particularly interested in potential increases in capital expenditure, which could provide a much-needed boost to the economy.
One of the most anticipated announcements is a possible cut in personal income tax. This move could offer relief to the middle class and encourage increased consumption, which is vital for economic recovery. However, experts caution that the extent of any tax relief may be limited due to fiscal constraints. Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, emphasized that while the market will react quickly to budget announcements, the long-term direction will depend on broader trends in growth and earnings recovery.
Sector-Specific Reactions
The stock market’s reaction to the budget is not uniform across all sectors. Among the Sensex constituents, certain stocks have shown resilience. Sun Pharma, for instance, led the gains with over 2% after reporting a Q3 net profit of Rs 2,903 crore, surpassing market expectations. Other stocks like Adani Ports, UltraTech Cement, IndusInd Bank, and NTPC also recorded gains.
Conversely, some stocks faced declines. Titan, Nestle India, Kotak Bank, and Asian Paints saw their values drop, reflecting the mixed sentiment in the market. Additionally, railway stocks surged by up to 4%, driven by expectations of increased sector spending in the budget. Companies such as RVNL, Titagarh Rail Systems, RailTel Corp, Ircon International, and IRFC benefited from this optimism.
Market Outlook and Investor Sentiment
As the budget presentation approaches, market analysts are closely monitoring key support and resistance levels for the Nifty. Hardik Matalia from Choice Broking noted potential support at 23,400, 23,300, and 23,200, with resistance levels at 23,600, 23,700, and 23,800. This technical analysis will be crucial for investors looking to navigate the market’s volatility.
Overall, the market’s response to the budget will be swift, but experts warn that the effects may be short-lived. The focus will likely shift back to fundamental economic indicators and corporate earnings in the days following the budget announcement. Investors are advised to remain cautious and informed as they navigate this critical period in the Indian stock market.
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