The Union Budget for the financial year 2025-26 has elicited a cautious response from stock markets in India. The BSE Sensex gained a marginal 5.39 points, while the Nifty finished down 26.25 points.
National Manufacturing Mission is proposed be set up to
🔶 Cover small, medium and large industries
🔶 Focus on ease and cost of doing business and future-ready workforce for in-demand jobs#ViksitBharatBudget2025 #Budget2025 #UnionBudget2025 pic.twitter.com/gMM5MsFoQf
— Ministry of Finance (@FinMinIndia) February 1, 2025
The mixed reaction is attributed to the modest 10 percent year-on-year increase in capital expenditure (capex) for FY26, which fell short of investor expectations.
Key sectors like railways, defense, and infrastructure, which have substantial market influence, saw dampened sentiment.
Repositioning India Post to Catalyse Rural India with range of services to be expanded to include:
🔘Rural community hub collocation
🔘Institutional account services
🔘DBT, cash-out and EMI pick-up#ViksitBharatBudget2025 #Budget2025 #UnionBudget2025 pic.twitter.com/sOxgsgxMRr
— Ministry of Finance (@FinMinIndia) February 1, 2025
Consumption-based sectors, expected to benefit from personal tax exemptions, had a limited impact on the broader market due to their modest market mix position. Tanvee Gupta Jain, chief economist at UBS India, expressed disappointment with the capex budget, which increased only 0.9 percent from the previous fiscal.
Mixed market reactions to capex plan
The Budget allocated Rs. 11.21 lakh crore towards capital expenditure for FY26, seen as insufficient given higher nominal GDP growth assumptions.
Sundararaman Ramamurthy, MD & CEO, BSE was the chief guest at the Talk on UNION BUDGET 2025-26 organised jointly by the International Vaish Federation – Mumbai and BSE. #BSE #BSEIndia #Budget2025 #UnionBudget pic.twitter.com/SOUkN3ki0h
— BSE India (@BSEIndia) February 1, 2025
''The budget builds on India’s growth momentum with strong development measures, continued fiscal prudence, increased capex and reduced tax burden on the middle class.''
View on #UnionBudget2025 by our MD & CEO, Shri @ashishchauhan #NSE #NSEIndia #UnionBudget #Budget2025… pic.twitter.com/xZevYRZ1iv— NSE India (@NSEIndia) February 1, 2025
The central government has targeted bringing down the fiscal deficit to 4.4 percent of GDP in FY26 from 4.8 percent in FY25, reflecting a slowdown in fiscal consolidation efforts observed over the past four years. Navneet Munot, MD and CEO of HDFC Asset Management, noted that the Budget managed to walk a tightrope, emphasizing fiscal consolidation while also aiming to stimulate economic growth by increasing disposable income through tax relief for middle-class households. Despite potential short-term market volatility due to the global economic backdrop, the long-term trajectory rooted in policy prudence and support for growth is expected to bolster India’s appeal to both foreign and domestic investors.
Only a few sectors like FMCG showed resilience, with the BSE FMCG index closing nearly 3 percent higher, driven by consumption-led buying. This was the first full-year Budget of the coalition government since it assumed power for a third consecutive term in 2024, aiming to strike a balance between growth and fiscal prudence amid challenging economic risks.