Budget 2025 boosts consumer spending, stocks rise

Kaityn Mills
3 Min Read
Budget 2025 boosts consumer spending, stocks rise

The Union Budget 2025 has set the stage for potential stock-specific growth amid market volatility. Market veteran Madhusudan Kela pointed out that the income tax relief of roughly one lakh crore rupees is substantial and will enable more spending, mainly benefiting the middle class. With the government’s focus on capital expenditure, positive repercussions are anticipated across various sectors.

This could lead to an uptick in consumer spending on goods and services, including FMCG, white goods, and the hospitality sector. Kela emphasized that the tax cut has a potential multiplier effect on the economy. The incoming funds into taxpayers’ hands will likely flow back into the economy, stimulating growth across various segments.

Several sectors are expected to benefit significantly from the proposed measures in Budget 2025. Key sectors anticipated to grow include agriculture, capital goods, cement, consumer, financials, telecom, and utilities. The government’s commitment to enhancing infrastructure will spur growth in related areas such as cement and capital goods.

Agriculture remains a key focus area, with enhanced funding and support programs for farmers expected to drive growth in agricultural output and productivity.

Income tax relief boosts spending

The telecom sector benefits from various incentives for expanding digital infrastructure, while enhanced support for utilities aims to improve energy infrastructure.

Financial services are set to see positive impacts due to proposed regulatory changes and increased investment in the sector. The consumer goods sector is also anticipated to prosper, as higher investments in infrastructure and increased rural incomes typically translate to higher consumer spending. Investors should focus on sectors such as FMCG, insurance, tourism, and leather in the coming weeks.

Insurance stocks like SBI Life, HDFC Life, and LIC may benefit from the proposal to increase the foreign direct investment rate to 100 percent. Tourism stocks such as IRCTC and Thomas Cook India are expected to gain as the government plans to develop the top 50 tourist destinations. FMCG stocks like ITC, Hindustan Unilever, and Nestle India are set to benefit from the announced changes in the tax regime to benefit the middle class.

Energy stocks like REC, NTPC, and Tata Power are keenly watched as the government announced plans to focus on energy transmission and nuclear energy expansion. Leather and footwear stocks such as Bata and Relaxo are potential gainers as the government aims to generate jobs and turnover from the sector. While bull investors focus on sectors poised for growth due to budget measures, bears may view the lack of significant infrastructural allocations and higher capex as reasons to be cautious.

Investors should check with certified experts before making any investment decisions.

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Kaitlyn covers all things investing. She especially covers rising stocks, investment ideas, and where big investors are putting their money. Born and raised in San Diego, California.