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Capex hike or consumption boost in Budget 2025? 5 things Nifty bulls expect from Nirmala Sitharaman

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As the Indian economy grapples with a slower pace of growth, declining consumption, and a fiscal deficit exceeding 4.5%, Finance Minister Nirmala Sitharaman will try her best to maintain equilibrium when she presents her 8th Union Budget on February 1. Nifty bulls, entering the Budget day with low expectations, want the FM to prioritize growth, hike capex, and boost consumption by cutting income tax rates without losing sight of fiscal goals.

While the impact of Budget on the stock market has been on a declining trend over the last few years, this time the expectations are low as the success of populist measures like ‘Ladki Baheen Yojana’ could make the Modi government try to attempt a balanced act between infrastructure and social welfare schemes.

UBS India strategist Anubhav Agarwal said the impact of Budget on markets would be muted as capex and consumption boosts could be limited if the fiscal deficit is to be contained at less than 4.5% of GDP in FY26.

Here are 5 key investor expectations from Nirmala Sitharaman in Budget 2025:

1) The budget should hike capex expenditure

Analysts say the weak trend in government spending, especially capex, has raised concerns that the growth momentum is stalled. Morgan Stanley analysts expect the capex shortfall to be Rs 1.45 lakh crore, which is 13% of the total capex outlay as per F25 budgeted estimates.

“We expect the FY26 Budget to be growth-oriented, emphasising increasing Capex spending to advance public infrastructure development. Key focus areas are

anticipated to include roads, water, metro, railways, defence, digital infrastructure, and green technologies, supporting the nation’s long-term growth objectives. Its overall focus would also be on creating more jobs and achieving investment-driven growth,” Axis Securities said.

Nomura expects the public capex budget to increase by 12.5% YoY in FY26.

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