Union Budget 2025: Anirudh Garg of Invasset PMS highlights 6 measures that may boost Indian stock market sentiment
Union Budget 2025: The Indian stock market faces pressure due to foreign capital outflows and macroeconomic concerns ahead of the Union Budget 2025, with hopes for tax reforms and increased capital expenditure to stimulate growth.
Union Budget 2025: The Indian stock market is experiencing strong selling pressure across segments due to a host of concerns, including foreign capital outflows, a weakening macroeconomic outlook, fading expectations of a US Federal Reserve rate cut, and uncertainty surrounding Donald Trump’s trade policies as he prepares to assume office on January 20.
Amid the deep correction, the focus has shifted to the Union Budget 2025 which Finance Minister Nirmala Sitharaman will unveil on February 1. In light of the Union Budget 2025 announcement, the Indian stock market ( BSE and NSE) will remain open on 1 February despite being a Saturday.
Expectations are high for the government to uphold fiscal prudence while introducing further measures to boost the manufacturing and infrastructure sectors. Additionally, there is optimism that the Finance Minister might announce adjustments to income tax slabs, potentially aiding sluggish consumption.
The Indian stock market could cheer for tax reforms, increased capital expenditure, and measures for banking, infra, automobile, and IT sectors.
Anirudh Garg, Partner and Fund Manager at Invasset PMS, said markets respond positively to budgetary measures that drive economic growth, ensure fiscal sustainability, and enhance business efficiency. He highlighted budget proposals in the following six key areas that could uplift market sentiment.
1. Tax reforms
Garg underscored rationalising corporate and personal income tax rates could leave more disposable income in the hands of consumers and increase profitability for businesses. "Measures such as broadening the tax base, reducing compliance burdens, and addressing litigation through dispute resolution schemes signal investor-friendly governance," said Garg.
2. Increased capital expenditure
Garg pointed out that allocating higher funds to infrastructure projects, healthcare, rural development, and green energy initiatives creates a multiplier effect on the economy by boosting demand across sectors. For instance, investing in highways, railways, and urban infrastructure can stimulate construction, manufacturing, and ancillary industries while creating employment opportunities.
3. Sectoral incentives
Offering production-linked incentives (PLI) for key industries like renewable energy, electric vehicles, and semiconductors can encourage capital inflows and position the country as a global manufacturing hub, said Garg. Tailored policies for startups and MSMEs, such as access to credit and lower compliance costs, can further enhance growth.
4. Privatisation and disinvestment
"Setting ambitious yet achievable disinvestment targets and expediting privatization of public sector enterprises ensures optimal resource allocation and reduces fiscal strain. Announcements of IPOs for large state-owned companies or monetization of underutilised government assets are often viewed positively by the market," Garg said.
5. Fiscal responsibility
Garg emphasised a balanced approach to fiscal policy is critical. "While growth-oriented spending is necessary, adhering to a fiscal deficit target and presenting a credible roadmap for medium-term consolidation alleviates concerns about debt sustainability and inflation," he said.
6. Ease of doing business
Simplifying regulatory processes, digitising government services, and offering single-window clearances for projects promote investment. "Measures to enhance policy stability and transparency, particularly in tax and regulatory frameworks, encourage both domestic and foreign investors," Garg said.
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