BAJAJ BROKING
January 29, 2025
5 mins read
The Union Budget 2025 can end up being a game-changer for the Indian stock market. You may wonder how. Don’t worry because we’ll explain this in detail and in simple terms because Bajaj Broking strongly believes that BudgetSimpleHai!
The middle class is expecting Finance Minister Ms. Nirmala Sitharaman to provide them with tax relief when she presents the budget on February 1. The expectations of tax cuts are high because salaried individuals have been battling with inflation for some time now.
The rural economy is facing some challenges, particularly in agriculture. Measures announced by the government to support the middle class and rural households could be beneficial in addressing these issues
Tax cuts for salaried individuals will mean higher savings and potentially an increase in their stock market investments. Besides, experts believe that Ms. Sitharaman may give thrust to the infrastructure sector, which means she may announce higher allocations for bridges, roads, railways, airports, etc.
If that happens then, it will certainly be a positive move for infrastructure stocks. Recently, the Reserve Bank of India (RBI) transferred dividends amounting to a whopping ₹2.11 lakh crores to the government.
This has improved the government’s fiscal position immensely. This shows that the government is in a better position to improve spending on social welfare, reduce taxes, and provide a boost to agriculture. All these moves will give a boost to the stock market. Now that we have explained how this budget can be a game-changer, let’s move on to other aspects.
The following points explain the expected key announcements from the budget and their likely impact on the stock market:
Agriculture: The government is expected to announce structural reforms in agriculture by improving market access for farmers. More investments are likely in agri-infrastructure.
Infrastructure: The budget is likely to give a boost to infrastructure spending. Higher allocations are expected for roads, bridges, railways, and aviation projects. The road and transportation sector is expected to be a major beneficiary.
Automobiles: To give a boost to the environment, the government may announce some incentives for the manufacturers of electric vehicles.
Tax relief for salaried individuals: The government may reduce the tax burden of salaried individuals by providing for deductions under the new tax regime.
Fintech:Fintech companies that are working to provide banking services to poor people may get some support from the government.
According to reports, Finance Minister Nirmala Sitharaman will present the 2025 Union Budget on February 1 This Budget is expected to have announcements on policies, schemes, income tax rate slabs, and more that are likely to affect everything around us.
To simplify this year’s Budget and to decode its impact on your life, your investment portfolio, and all that you do, we bring you #BudgetSimpleHai!
Join us on our website or head over to any of our social handles to get the latest updates on the Union Budget as it happens. Read in-depth reports, watch videos, and get a clear understanding of what’s in store.
Kyunki Bajaj Broking ke saath, #BudgetSimpleHai
The biggest boost that the Union Budget 2025 can give to salaried individuals is by reducing their tax burden. This budget can be a game-changer for the middle class. Here’s how:
Currently, the new tax regime does not have deductions or exemptions for leave travel allowance, housing rent allowance, medical insurance premiums, and interest on home loans for houses occupied by salaried individuals. This affects salaried people.
The Finance Minister could provide some of these deductions under the new tax regime.
Expectations are also that the budget may hike the standard deduction limit of Rs. 50,000 which was last increased in April 2020.
Salaried individuals expect the government to increase the limit for exemption of child education allowance.
If the budget fulfils these expectations, people will be able to save more and invest more. It’s good for investors and excellent for the stock market.
The government’s fiscal policy can have a huge impact on the stock market. Fiscal policy is at the heart of an economy. In this context, all investors should be concerned about the following aspects:
As per many experts, the budget will retain the fiscal deficit target of 5.1% of GDP, which was provided by the interim budget.
This means that the government will maintain the policy of fiscal prudence, which shows that it’s not likely to increase its expenditure substantially. If the government maintains or lowers the deficit target, it will give a signal of stability to the stock market because it will show that the government’s finances are in control. The government is expected to improve its expenditure on long-term projects while keeping its fiscal deficit in check. This shows that the infrastructure sector may get a boost. If the infrastructure sector gets a boost from the budget, infrastructure stocks may go up.
This budget could be a game-changer for the Indian stock market, as it will be the first full budget presented by the Modi government since its re-election in 2019.
Hence, the Finance Minister can lay down her vision for the next 5 years. Besides, the RBI has transferred substantial dividends to the government. As a result, the government’s fiscal health is looking good, which means it may announce tax relief for salaried people and give a boost to agriculture and the rural economy.
If the budget fulfils these expectations, both rural and urban consumers will have more money. Hence, they will be able to save and invest more, which is good for the stock market. So if you are an investor in stocks or are thinking of opening a demat account, you should be extremely excited about this budget.
In case you want to read more about Union Budget 2025, click here.
Additional Read:Union Budget 2025: What to Expect for the Agri-Tech Industry?
Additional Read:Union Budget 2025: What to Expect for MSME Sector
Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
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If the government introduces deductions under the new tax regime, salaried individuals will likely be able to save and invest more. Additionally, they will have the flexibility to switch between the old and new tax regimes with relative ease.
The Union Budget 2025 is anticipated to benefit sectors such as agriculture, consumer staples, manufacturing, construction, textiles, and technology, driven by increased allocations and policy support.
Indices like Nifty and Sensex may experience volatility around the Budget. On the day of the announcement, heightened volatility is expected. If the Budget includes favorable measures for investors, the indices may show upward movement.
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