As the Union Budget 2025 approaches, all eyes are on potential reforms that could influence various sectors and the stock market. Investors using the best zero brokerage trading platform in India are keen to understand which industries might benefit from policy changes. From tax adjustments to infrastructure investments, the announcements could shape portfolio strategies for both seasoned and new investors. In this article, we break down key sectors and stocks to watch, along with investment strategies that align with potential budgetary developments.
Auto Sector: CNG and Hybrid Vehicles in Focus
The automobile industry could witness significant developments depending on GST reforms. If the government reduces GST on hybrid vehicles, Maruti Suzuki India Ltd is expected to benefit. Similarly, if GST on CNG two-wheelers sees a cut, Bajaj Auto and TVS Motor may gain traction. Furthermore, simplifying GST refunds for EV manufacturers could ease working capital issues, favouring companies like Tata Motors, M&M, Ashok Leyland, and Ola Electric Mobility. Investors should keep an eye on these stocks, especially given the increasing emphasis on green mobility.
Infrastructure Push: Railways and Roads
Infrastructure development remains a top priority, with expectations of a higher budget allocation for roads and railways. Analysts predict a 15–20% year-on-year increase in railway capital expenditure, focusing on rolling stock, new tracks, and safety enhancements. Companies such as Titagarh Wagons and Texmaco Rail & Engineering stand to benefit. Meanwhile, road development could boost construction and equipment stocks. Investors looking to diversify should consider these sectors, especially if they align with long-term growth strategies.
Paints and Housing: Growth Opportunities
The “Housing for All” initiative and increased Smart City funding could positively impact the paints sector. Companies like Asian Paints, Berger Paints, and Pidilite Industries might benefit from higher demand for housing and infrastructure development. If relaxed FDI norms accompany these projects, the sector could see further gains, presenting investment opportunities for those tracking real estate-related stocks.
Defence: A Growing Sector
The defence industry could see a 7–8% increase in capital expenditure, with higher allocations toward research and development, UAVs, drones, and anti-drone systems. Programmes like QRSAM, P-75I, and LCA Mark1A could materialise, benefitting subsegments such as defence electronics. Stocks in this space, which have seen recent corrections, may provide an entry point for investors seeking exposure to a sector with ambitious government targets.
Oil and Gas: Watch Out for Windfall Tax
Rising crude oil prices above $75 per barrel have raised concerns about a possible reintroduction of windfall taxes. Such a move could negatively affect ONGC and other oil exploration companies. Investors in this sector should monitor policy changes closely and weigh the potential risks before making investment decisions.
Health and Insurance: Mixed Signals
The healthcare sector may see broader Ayushman Bharat coverage, potentially impacting private hospitals’ profitability if forced to treat patients at lower prices. However, any GST reduction on health insurance for senior citizens or low-sum insured products could boost general insurance companies. Investors focusing on healthcare stocks should balance opportunities in insurance against potential risks in hospital operations.
Agriculture and Fertilisers: Steady Growth Expected
Fertiliser subsidies are expected to remain stable at Rs 1.5–1.7 lakh crore, which is neutral for the market. However, higher crop insurance allocations could support agriculture stocks. Continuation of PM KISAN and insurance schemes may also positively impact related sectors. Investors interested in agri-based industries should explore these developments for long-term growth.
Capital Goods: Sustained Growth
The capital goods sector is expected to receive a 10–12% year-on-year increase in budget allocation. Companies in this space may experience steady demand growth, driven by continued investment in public infrastructure. Stocks in this sector could provide stability for investors seeking a defensive strategy amid market volatility.
Tax Reforms and Market Expectations
The budget is likely to include adjustments to income tax slabs or increased deductions for housing loan interest to boost household demand. Expanding the Production Linked Incentive (PLI) scheme and addressing inverted duty structures could strengthen manufacturing. Start-ups and International Financial Services Centre (IFSC) businesses might receive additional support, which could benefit technology and financial service stocks.
Investor Strategy: Navigating Volatility
As fiscal policy remains constrained, investors may face volatility in the short term. A defensive portfolio strategy focusing on quality stocks is advisable. Monitoring earnings growth, domestic liquidity, and global developments will be critical in shaping investment decisions. Those using best zero brokerage trading platform in India should stay updated on budget announcements and consider reallocating portfolios based on sector-specific opportunities.
Conclusion: Staying Prepared
The Union Budget 2025 has the potential to influence various sectors significantly. From automobile and infrastructure to healthcare and defence, each industry presents unique opportunities and risks. Investors should stay informed and align their strategies with emerging trends. Using the best zero brokerage trading platform in India can help optimise investments while keeping costs low. By focusing on quality and staying adaptable, investors can navigate the post-budget landscape effectively.
Download app: Android User | IOS User | Web Trader