On February 1, 2025, Indian stock markets exhibited a muted response following the Union Budget announcement. The BSE Sensex experienced a marginal uptick of 0.01%, while the Nifty 50 index saw a slight decline of 0.11%.
Finance Minister Nirmala Sitharaman unveiled an 11.2 trillion rupees capital expenditure plan for the fiscal year 2025-26. This figure fell short of market expectations, leading to a downturn in shares of industrial and infrastructure companies such as Larsen & Toubro, PNC Infratech, and NBCC.
Conversely, the budget introduced significant personal income tax cuts, increasing the exemption threshold to 1.28 million rupees annually. This move is anticipated to boost disposable incomes and stimulate consumer spending. As a result, sectors like fast-moving consumer goods, automobiles, and real estate witnessed gains. Notable performers included Hindustan Unilever, Nestle, Maruti Suzuki, and Hero MotoCorp.
Despite these developments, the overall market reaction remained subdued. Analysts suggest that while the tax relief measures are poised to enhance consumption, the modest increase in capital expenditure may not be sufficient to drive substantial economic growth. This balance of factors contributed to the tepid market response observed.
