Budget 2025 expectations: The nation is eagerly anticipating the Union Budget for FY 2026, set to be presented by Union Finance Minister Nirmala Sitharaman of Modi 3.0 on February 1, 2025, at 11:00 IST. In light of recent domestic and macro economic trends, investors are speculating on which sectors may show growth and could be promising for investment based on the FM’s announcements.
Sunil Damania, Chief Investment Officer, MojoPMS believes that the Finance Minister has limited choices but to introduce measures that can stimulate the economy. Without decisive action, the slowdown could deepen, creating further challenges across various sectors.
Damania highlighted that the Indian economy is currently facing a slowdown. The Q1 and Q2 GDP data have not been encouraging, and the net GST collections have shown a modest growth of just 3.3% YOY. Additionally, the overall GDP growth forecast for FY 2025 has been revised downward to 6.4%. This slowdown demands urgent attention in the upcoming budget.
Further with developments regarding Donald Trump’s inward-looking policies could impact global trade in CY25, posing a risk to India’s export growth. In this context, ICICI Securities believes that the Union Budget for FY26 will prioritize fiscal prudence and quality of spending to lower the fiscal deficit.
This approach aims to shield India from external shocks while promoting sustainable growth through a focus on capital expenditure (capex) rather than revenue expenditure (revex) for income stimulus.
A potential dip in election fervor, along with improving prospects for rabi crops due to higher reservoir levels, could help keep revenue expenditure on subsidies and welfare under control. This orientation in the Union Budget 2026 is expected to be positive for domestic cyclicals, according to the brokerage.
Which Sector Will Benefit The Most?
Sunil Damania said that as for the sectors likely to benefit, my view is that the government will prioritize putting more money into the hands of consumers to enhance spending power. This would directly benefit the FMCG sector as increased consumer spending would drive higher sales, improving both top-line and bottom-line growth for these companies. Additionally, risk reward is favouring FMCG pack. Input cost pressures are likely to ease allowing them to improve their margins going forward.
Another sector that stands to gain is capital goods. The government is likely to allocate a higher budget for capital expenditure and ensure that these funds are effectively utilized in FY 2026. This focus on infrastructure development and project execution will provide significant opportunities for the capital goods sector to perform well.
In summary, my top picks for sectors to watch following the budget are FMCG and capital goods, given their potential for growth driven by increased government spending and consumer-centric measures.
On the other side, Dr. Praveen Dwarakanath, Vice President of Hedged.in added that the budget might focus on specific areas likely focus can be in employment, skilling, MSME’s and middle class. Likely sectors to get the boost in the budget are infra, transport and roads, IT services and MSMEs.
Nifty 50 before Budget
According to Dwarakanath, Nifty 50 technically is trading near critical support at the 23,200 level, a break of which can take the index towards the 22,000 level. The momentum indicators on the daily and weekly chart are well below the oversold region, which can act as a reason for a dead cat bounce towards the 24,000 levels, which can also be the budget rally towards the end of January month. Elliot wave “C” on the weekly chart suggests the index can go down to the 21,800 level if the support at 23,200 is broken. The ADX average line on the weekly chart is well below the 20 level, indicating one of the trends to pick up. With the ADX DI- line on top of the ADX DI+ line, the index will likely move down from current levels if the support at 23,200 is broken.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.
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