Budget 2025: Indian benchmark indices, Sensex and Nifty50, were buzzing in trade, during pre-open session, ahead of Union Budget 2025, which is set to be announded today. Sensex rose 0.18 per cent to 77,637.80, while Nifty50 was up 0.12 per cent at 23,536.60 levels in pre-opening trade.
The Economic Survey 2024-25 released on Friday, a day ahead of Budget 2025, made it clear that the Indian economy may not continue to grow at the high rates witnessed over the past few years. The Survey has projected the economy will grow between 6.3 per cent and 6.8 per cent in 2025-26. This financial year, according to the first advance estimates of the National Statistics Office, the economy is expected to grow by 6.4 per cent, compared to 8.2 per cent last financial year. READ MORE
According to Angel One, the upcoming Union Budget will play a crucial role in shaping investor sentiment, as it will provide insights into the country's financial health and future growth prospects. Historically, budget announcements have had a major impact on the equity markets, and this year, investors have their eyes peeled on how the Narendra Modi government would boost consumption, revive demand, and shape trade policies.
Motilal Oswal noted a sense of pessimism surrounding government capital expenditure (capex) after a notable 12 per cent year-on-year (Y-o-Y) dip between April and November 2024. This has left many investors concerned about the pace of government spending. If the budget includes a capex allocation above Rs 11 trillion, backed by strong commentary, it could surprise the market positively. However, after a series of promises for freebies during state elections, investors remain cautious about the possibility of more handouts in the Budget. ALSO READ: Stock market Holiday: Is trading open on BSE, NSE on Budget Day, Feb 1?
Stock market trading strategy on Budget 2025 day
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G Chokkalingam, founder of Equinomics Research, advises focusing on small and mid-cap stocks, which have seen recent corrections, presenting opportunities for investment.
Chokkalingam suggests that if the market falls post-Budget, investors should consider buying quality small and mid-cap stocks, particularly those catering to domestic demand. If the market rallies, he recommends a portfolio split of 70 per cent in small and mid-cap stocks, with the remaining 30 per cent allocated to quality large-cap stocks.
V K Vijayakumar, chief investment strategist at Geojit Financial Services, believes the Budget’s impact will be short-term, typically lasting just a few days. If the Budget introduces growth-stimulating measures, like cuts in personal income tax, a rally could be likely.
However, the medium to long-term market trend will be more influenced by GDP and earnings growth. Vijayakumar highlights that markets are currently highly sensitive to earnings results, rewarding good performance and punishing poor results. In this environment, quality large-cap financials remain a safe sector for investors.
Key Nifty levels to watch on February 1
From a technical perspective, Angel One points out that the benchmark index has faced a major correction over the past few months, falling below both its 20 EMA and 200 SMA on daily charts. The formation of lower lows and lower highs has created concerns for the near-term. ALSO READ: Will Sensex, Nifty rally or tank on Budget 2025 day? Check key levels here
However, the index is currently testing crucial support levels within a ‘Falling Wedge’ pattern. This presents an opportunity for a cautious, short-term approach, with some hope for market relief, if the support zone between 22,800 and 22,400 holds.
Unless the Budget or global developments trigger major disappointment, this support zone may provide some stability.
On the upside, the 200 DSMA at around 23,800–24,000 serves as a critical resistance level. A decisive break above this level could signal a trend reversal to bullish territory, with the potential to target 25,000 and eventually new all-time highs.
As Budget 2025 looms, stock market participants must stay agile, monitoring for potential policy signals that could spark market movement.
While the Budget’s immediate impact may be short-lived, focusing on fundamentally strong small and mid-cap stocks, with a strategic allocation to large-cap stocks, offers a balanced approach for both short-term and long-term investors.
Investors should remain cautious in the near-term, but the prevailing market conditions could also present opportunities to accumulate quality stocks at attractive valuations, analysts said.
Budget 2025 expectations, Stocks to buy before Budget 2025
Motilal Oswal expects Budget 2025 to focus on capex, household income boost, indirect tax simplification & fiscal prudence.
MOFSL's top stock ideas ahead of Budget 2025 include largecaps like ICICI Bank, SBI, L&T, HCL Tech, M&M, Trent, Bharti Airtel, Titan Company, Sun Pharma, and Dixon Tech. Midcap stocks and Smallcap stocks like Indian Hotels, Cummins India, BSE, Godrej Properties, Coforge, Metro Brands, IPCA Labs, Angel One, Vinati Organics, and JSW Infrastructure.