Indian Budget 2025–26

And Its Impact on Stock Market

Hello everyone, welcome back.

Today, I want to analyze and discuss about the recently announced Budget 2025–26 and what it means for the Indian economy and, more importantly, the stock market.

The budget has laid out a clear roadmap for growth, focusing on four key engines — Agriculture, MSMEs, Investment, and Exports — with structural reforms acting as the fuel for long-term economic expansion.

Note: Views expressed (including stocks/businesses discussed here) are my own and not an investment advice.

Details for reference: https://www.indiabudget.gov.in/

Growth Drivers Identified

First, let’s discuss the key focus areas of this budget:

• Agriculture & Rural Economy: The PM Dhan-Dhaanya Krishi Yojana will boost productivity in 100 districts. The Mission for Aatmanirbharta in Pulses aims to increase domestic production, and there is strong support for vegetable, fruit, and cotton farming. Additionally, higher credit limits under Kisan Credit Card (KCC) will improve farmers’ access to funds.
• MSMEs and Startups: The government has enhanced investment and turnover limits for MSME classification, increased credit availability with additional guarantees, launched a Fund of Funds with ₹10,000 crore for startups, and introduced a new scheme for first-time entrepreneurs from SC/ST and women.
• Investment in Infrastructure: The budget has allocated ₹1.5 lakh crore in interest-free loans to states, a ₹10 lakh crore asset monetization plan, and significant investments in urban development, power, and nuclear energy.
• Export Promotion & Global Integration: The Export Promotion Mission will ease credit and cross-border trade, BharatTradeNet will streamline digital trade documentation, and initiatives to integrate Indian firms into global supply chains will enhance India’s manufacturing footprint.
• Financial Sector Reforms: The budget allows 100% FDI in insurance, introduces regulatory simplifications, and proposes a new investment-friendly taxation framework.
• Personal Income Tax Reforms: The government has increased the tax-free income threshold to ₹12 lakh (₹12.75 lakh for salaried individuals), with revised tax slabs that will boost middle-class savings and disposable income.
• Sector-Specific Boosts: The budget also supports green energy and clean-tech manufacturing, shipbuilding, electric vehicles, space technology, and tourism & medical tourism.
• Fiscal Deficit & Market Borrowings: The fiscal deficit target is set at 4.4% of GDP, and the government plans to borrow ₹14.82 lakh crore to finance its spending.

Anticipated Impact on the Indian Stock Market

Now, let’s break down how these budgetary measures will impact different sectors of the stock market.

• Agriculture & Rural-Focused Stocks: Companies in agriculture, irrigation, rural infrastructure, and fertilizers will likely benefit. Stocks like UPL, Chambal Fertilizers, and Mahindra Agri may see gains.
• MSME & Banking Sector: Banks catering to MSMEs — SBI, ICICI Bank, Bajaj Finance — could see higher credit growth. Fintech players focused on rural financing will also benefit.
• Infrastructure & Capital Goods Rally: Higher spending on roads, ports, and railways will favor stocks like L&T, IRB Infra, Siemens, while urban infrastructure spending will boost Ultratech Cement, Ambuja Cement.
• Insurance & Financials to Attract More Investments: 100% FDI in insurance could drive foreign investments into stocks like HDFC Life, ICICI Lombard, and SBI Life.
• Consumer Spending Stocks to Gain: Increased disposable income due to tax cuts will benefit retail, FMCG, and auto sectors. Stocks like HUL, Titan, and Maruti Suzuki could see strong demand.
• Exports & Manufacturing Boom: With increased government support, stocks in textiles, chemicals, and engineering such as Tata Steel, Havells, and Dixon Technologies will gain momentum.
• Green Energy & Clean-Tech Stocks to Benefit: Renewable energy and EV-related stocks like Tata Power, Adani Green, and Exide Industries will likely see increased investment.
• Market Volatility Due to Fiscal Deficit: While the budget is growth-oriented, high borrowing needs could pressure bond yields, and a possible rise in interest rates might impact highly leveraged companies in the short term.

The budget is growth-oriented with a long-term vision, likely to support bullish sentiment in sectors like agriculture, infrastructure, MSMEs, insurance, and green energy. However, bond yields and fiscal deficit concerns could lead to short-term volatility.

Sector-Wise Stock Watchlist Based on Budget 2025–26

Note: Views expressed (including stocks/businesses discussed here) are my own and not an investment advice.

1. Agriculture & Rural Development

• UPL Ltd — Agri-inputs & chemicals
• Chambal Fertilizers & Chemicals — Fertilizers
• Coromandel International — Fertilizers & crop protection
• Mahindra & Mahindra — Tractors & rural vehicle sales
• Dhanuka Agritech — Pesticides & crop solutions

2. MSME & Banking (Credit Growth Beneficiaries)

• State Bank of India (SBI) — Leading MSME lender
• HDFC Bank — SME & retail banking
• Bajaj Finance — MSME financing
• AU Small Finance Bank — Strong MSME presence
• Muthoot Finance & Manappuram Finance — Rural credit & gold loans

3. Infrastructure & Capital Goods

• Larsen & Toubro (L&T) — Infrastructure & capital projects
• Siemens India — Industrial automation & smart infrastructure
• Cummins India — Power generation & heavy machinery
• Ultratech Cement & Ambuja Cement — Cement for infra projects
• IRB Infrastructure & KNR Constructions — Road & highway projects

4. Insurance & Financial Services

• HDFC Life Insurance — Beneficiary of 100% FDI in insurance
• ICICI Lombard General Insurance — Growth from increased FDI inflow
• SBI Life Insurance — Strong domestic insurance play
• Star Health Insurance — Growth in health insurance penetration

5. Consumer & Auto (Boost from Tax Cuts & Rural Spending)

• Titan Company — Higher discretionary spending on jewelry & watches
• Avenue Supermarts (DMart) — Retail sector boost from tax savings
• HUL & ITC — Increased consumer spending on FMCG
• Maruti Suzuki — Passenger car demand rise due to tax savings
• Hero MotoCorp & Bajaj Auto — Two-wheeler demand recovery in rural areas

6. Export-Oriented & Manufacturing Stocks

• Tata Steel & JSW Steel — Infrastructure & export demand
• Dixon Technologies & Amber Enterprises — Electronics & PLI scheme beneficiaries
• Havells India — Electrical goods for exports & domestic growth
• Tata Motors (JLR division) — Auto exports & EV manufacturing

7. Green Energy & Clean-Tech Stocks

• Tata Power — Renewable energy & EV charging stations
• Adani Green Energy — Solar & wind energy expansion
• Exide Industries & Amara Raja Batteries — EV battery manufacturing
• Suzlon Energy — Wind energy projects
• Reliance Industries (Renewable Division) — Hydrogen & solar investments

8. Logistics & Transportation

• Container Corporation of India (CONCOR) — Rail logistics & freight growth
• Blue Dart Express & TCI Express — Growing e-commerce & logistics reforms
• Adani Ports & SEZ — Export & port infrastructure boost
• GMR Infrastructure & InterGlobe Aviation (IndiGo) — UDAN scheme & new airport developments

9. Tourism & Hospitality (Medical & Spiritual Tourism Push)

• Indian Hotels (Taj Group) — Expansion in premium & budget hospitality
• Lemon Tree Hotels — Mid-segment hotel growth
• EaseMyTrip — Online travel bookings boost
• Apollo Hospitals & Fortis Healthcare — Medical tourism beneficiaries

Investment Strategy

Note: Views expressed (including stocks/businesses discussed here) are my own and not an investment advice.

• Short-Term (3–6 months): Infrastructure, MSMEs, and Banking sectors should see immediate action. Stocks like L&T, SBI, Bajaj Finance, and Ultratech Cement could rally.
• Medium-Term (6–12 months): Consumer, Auto, and Green Energy stocks should benefit as disposable incomes rise and government projects gain traction.
• Long-Term (1–3 years): Insurance, Export-Oriented, and Manufacturing stocks will gain as reforms translate into higher economic activity.

Top Ranked Stocks Based on Valuation Metrics

Note: Analysis is for illustration purposes, please do your own diligence before investing.

To provide a ranked and filtered watchlist based on valuation metrics, I will use the following key parameters:

Key Valuation Metrics for Ranking

1. PE Ratio (Price-to-Earnings) — Lower is better for value stocks.
2. PB Ratio (Price-to-Book) — Lower is better for undervaluation.
3. ROE (Return on Equity) — Higher is better for profitability.
4. Debt-to-Equity Ratio — Lower is better for financial stability.
5. 5-Year Sales & Profit Growth — Higher is better for growth potential.

I’ll need to fetch these financial metrics from a stock screener (like Screener.in) or Yahoo Finance. Let me run a Python script to fetch this data for you.

Note: Views expressed (including stocks/businesses discussed here) are my own and not an investment advice.

Observations

✅ Best Value Picks: Chambal Fertilizers, SBI, UPL Ltd — Low PE, strong ROE, and low debt.
✅ Growth-Oriented Plays: Tata Power, HDFC Bank, L&T — Strong revenue & profit growth.
✅ High Valuation Risks: Adani Green, HDFC Life — High PE, but strong long-term prospects.

Details for reference: https://www.indiabudget.gov.in/

If you loved this story, please feel free to check my other articles on this topic here: https://ankit-rathi.github.io/tradevesting/

Ankit Rathi is a data techie and weekend tradevestor. His interest lies primarily in building end-to-end data applications/products and making money in stock market using Quantvesting methodology.