Bull vs bear: Stocks to watch this week after Budget 2025 — FMCG, insurance, tourism, energy, leather stocks in focus
Bull vs bear: FM Nirmala Sitharaman announced the Union Budget 2025 on Saturday, February 1. FMCG, insurance, tourism, leather are among the key sectors for stock market investors to look at
Bull vs bear: Indian benchmark stock market indices closed flat after Saturday's market session as investors reacted negatively to the Union Budget 2025 capex numbers. The Nifty 50 index closed 0.11 per cent lower at 23,482.15 points after the stock market session, compared to 23,508.40 at the previous market close.
The BSE Sensex closed 0.01 per cent higher at 77,505.96 points, compared to 77,500.57 points at the previous stock market close. India's budget announcements fell short of market expectations, as economists and investors expected the government to announce a higher capex allocation amid an economy growing at a slow pace.
India's revised budget estimates for FY2024-25 showed that capital expenditures for this fiscal year are expected at ₹10.18 lakh crore, more than 8 per cent short of the budgeted ₹11.11 lakh crore.
Stock markets crashed from a higher level and then recovered to close at a flat note as the government announced income tax changes to help the nation's middle class.
Stock market outlook:
Sugandha Sachdeva, the Founder of SS WealthStreet, said, “Markets closed on almost a flat note post-Budget 2025, reflecting a muted overall reaction as it absorbed key budgetary announcements. While the budget delivered several growth-oriented measures, the absence of any major surprises kept market volatility in check.”
“A sharp rally was observed in consumption-driven sectors, notably FMCG, auto, tourism, and agri-related stocks, buoyed by the tax concessions aimed at stimulating domestic demand. The positive sentiment was further fueled by measures supporting rural incomes and middle-class consumption, positioning these sectors for sustained growth. In contrast, sectors like capital goods, defence, oil exploration, and railways witnessed a sharp correction due to the lack of significant policy push or fresh allocations in the budget. This sectoral divergence highlights the market’s selective focus on growth drivers aligned with budget priorities,” said the stock market expert.
“With the budget blueprint now in place, investor attention will shift towards the upcoming RBI policy meeting on 7th February. Expectations are running high for a potential rate cut, which could provide a much-needed boost to credit growth and lead to market stability, especially after four consecutive months of market pressure,” said Sachdeva.
“On the global front, markets are also bracing for potential volatility as the Trump administration prepares to impose new tariffs on imports from Mexico, Canada, and China. This development could influence global risk sentiment, adding another layer of complexity to market dynamics in the coming weeks,” she said.
Stocks to be in focus next week
Insurance Stocks: Bulls will focus on SBI Life, HDFC Life, ICICI Lombard, Life Insurance Corporation of India (LIC), and HDFC Life Insurance. The budget proposed increasing the foreign direct investment (FDI) rate to 100 per cent from 75 per cent.
Tourism Stocks: Tourism Finance Corp. of India, IRCTC, Easy Trip Planners, Thomas Cook India, and Yatra Online are among others to benefit, as the government plans to develop the top 50 tourist destinations, an update favouring the bulls.
FMCG Stocks: ITC, Hindustan Unilever, Marico, Patanjali Foods, Britannia, Tata Consumer Products, and Nestle India are among the focus stocks this week. The Budget 2025 announced changes in the tax regime to benefit the nation's middle class.
Bull investors are likely to be eyeing these stocks as the government plans to implement its plans to give income tax rebates for those earning up to ₹12 lakh. More income will lead to increased spending in consumer durables and FMCG products.
Aviation Stocks: Shares of Interglobe Aviation, GMR, and SpiceJet will be the focus as the government plans to launch a modified version of the UDAN scheme, which aims to develop regional aviation connectivity in India.
Energy Stocks: REC, IREDA, NTPC, NTPC Green Energy, Tata Power, and MTAR, are keenly watched as the government announced plans to focus on the nation's energy transmission and nuclear energy expansion.
Leather and footwear: Bata, AKI India, Relaxo, and Campus Activewear also come into play as the government plans to generate 22 lakh jobs and ₹4 lakh crore turnover from the sector.
“Overall, it is positive for FMCG, Consumption, Retail, Realty, Auto and new-age companies. Not as much positive for banking. A rise in gross borrowings is negative for banks as yield could rise, impacting treasury income—fiscal deficit target at 4.8% for FY25 and 4.4% of GDP for FY26,” said Manish Jain, Chief Strategy Officer, Institution Business, Mirae Asset Capital Markets.
“With rationalization in direct taxes, one needs to see how government capex targets are set. Positive move on critical minerals and BCD exemption for EV batteries to promote EV battery manufacturing in India and positive for battery chemical manufacturers,” said Jain.
The stock market bears will also circulate stocks next week as the Union Budget 2025 fell short of its scale regarding infrastructural allocations, higher capex allocation, major banking or railway announcements, and other massive expansion plans. This can likely impact the stock market as investors may take a bearish outlook on the sectoral stocks.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
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