Budget 2025: Finance Minister Nirmala Sitharaman is set to present her record eighth consecutive Union Budget on February 1, 2025. Investors and market analysts are keenly awaiting policy announcements that could shape the economic landscape. With global uncertainties, including the impact of U.S. trade policies, the Indian stock market has been under pressure, with the Nifty slipping 4% since the interim Budget in July 2024, and mid-cap and small-cap indices falling by 4.6% and 8.1%, respectively.
Despite these challenges, the Union Budget 2025 is expected to provide a boost to key sectors such as Railways, Defence, Infrastructure, and Agriculture. These sectors are anticipated to receive increased allocations, driving investment opportunities and stock market movements.
Railways: A Key Focus Area
Indian Railways remains a major focus in every Budget, given its crucial role in transportation and economic growth. The government is likely to increase the Gross Budgetary Support (GBS) for Indian Railways by 15-18%, bringing it to Rs 2.9 lakh crore – Rs 3 lakh crore. This is a significant jump from the Rs 2.52 lakh crore allocated in 2024-25.
The railway stocks that investors will watch closely include:
- Indian Railway Finance Corporation (IRFC)
- Rail Vikas Nigam Ltd (RVNL)
- Indian Railway Catering and Tourism Corporation (IRCTC)
- Container Corporation of India (CONCOR)
- Ircon International
- Titagarh Rail Systems
- RailTel Corporation of India
- Texmaco Rail and Engineering
- Jupiter Wagons
Defence: Strengthening Indigenisation and Modernisation
The defence sector is set to receive a major boost in Budget 2025, as the Ministry of Defence has declared 2025 as the ‘Year of Reforms’. The focus will be on modernisation, indigenisation, and capital expenditure for advanced defence equipment.
Market experts anticipate a significant increase in capital spending to strengthen India’s defence manufacturing capabilities. Stocks to watch in this sector include:
- Hindustan Aeronautics Limited (HAL)
- Data Patterns (DPIL)
- Mazagon Dock Shipbuilders Ltd (MDL)
- Bharat Dynamics Ltd (BDL)
- BEML Ltd
Infrastructure: A Continued Push for Growth
The Economic Survey 2024-2025 has emphasised the need for higher private-sector financing in infrastructure development. India requires sustained investment over the next two decades to maintain high economic growth.
Infrastructure-related stocks will be in focus, including:
- Larsen & Toubro (L&T)
- Adani Ports
- Ambuja Cements
- Bharat Forge
- DLF Ltd
- GAIL (India) Ltd
- NTPC Ltd
- Reliance Industries Ltd
- UltraTech Cement Ltd
Agriculture: Aiming for Higher Allocations
The government plans to increase agricultural spending by 15% to nearly $20 billion, marking the biggest rise in six years. Additionally, fertiliser subsidies are expected to rise slightly, from Rs 1.64 lakh crore in FY25 to Rs 1.7 lakh crore.
Stocks in the agriculture and fertiliser space likely to benefit include:
- Rashtriya Chemicals and Fertilizers (RCF)
- Madras Fertilizers
- Mangalore Chemicals and Fertilizers
- National Fertilizers Ltd (NFL)
- Paradeep Phosphates
- Coromandel International
Key Financial Ratios to Track
Investors should keep an eye on financial indicators such as:
- Price-to-Earnings (P/E) Ratio: To assess valuation levels of stocks.
- Debt-to-Equity Ratio: Important for infrastructure and railway companies with capital-intensive projects.
- Earnings Per Share (EPS): A measure of profitability, crucial for companies in all sectors.
- Return on Equity (ROE): To evaluate efficiency in generating profits from investments.
Conclusion: Market Expectations from Budget 2025
With FM Sitharaman set to unveil the Budget on February 1, investors will closely monitor announcements related to these four high-growth sectors. Any increase in government allocations could fuel strong market movements, making these stocks highly attractive for traders and long-term investors alike.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.