Anil Singhvi’s Post-Budget Market Outlook: Key sectors to watch and global risks ahead
The tariff war continues to pose risks, with retaliatory actions from China, Mexico, and Canada adding pressure. This could strengthen the dollar and weaken other currencies, including the rupee. If India faces tariffs too, FII selling could intensify, adding further pressure on the market.
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Investors and traders are eager to understand the Indian stock market's trajectory after the Union Budget 2025. Will the budget fuel market growth? Which sectors stand to gain, and which ones could face headwinds? Additionally, how will the ongoing tariff war and global economic conditions shape market sentiment? Get insights from market guru Anil Singhvi on what lies ahead.
What’s good for the market post-budget?
- Tax exemption on income up to Rs 12 lakh, which will boost consumption
- Rs 11.2 lakh crore allocated for capital expenditure, benefiting infrastructure and construction sectors
- Fiscal deficit control to enhance investor confidence, particularly among FIIs
- 100 per cent?FDI in the insurance sector is a significant boost for insurance companies
- The budget avoids populist measures, maintaining macroeconomic stability
What’s bad for the market?
- Slight disappointment as capital expenditure was lower than expectations
- No significant announcements for defence, railways, and manufacturing sectors, which could have driven growth
- The steel sector faces pressure with no new industrial policies introduced
Which sectors to buy post-budget?
Focus on sectors that cater to entry-level consumption and first-time buyers. These include:
- Textile and Retail: Policy support could boost demand.
- Affordable goods: Companies providing goods to the lower-middle-income group will see gains from increased disposable income.
- Electric Vehicles: Government’s focus on affordable electric two-wheelers and cars is a positive.
- FMCG: Tax cuts will fuel consumption growth.
- Real Estate: Tax exemptions could drive homebuyers.
- Government Banks: PSU banks stand to benefit from fiscal deficit control policies.
- Insurance: 100% FDI in insurance opens up significant growth potential.
Which sectors to reduce positions in post-budget?
- Infrastructure and Capital Goods: Lower-than-expected Capex allocation could dampen sector growth.
- Defense and Railways: No major reforms or announcements may result in subdued growth.
- Steel: The lack of new industrial policies may put pressure on the sector.
Big triggers ahead for the market:
- Impact of the tariff war: Global tensions with the US and China could impact market sentiment.
- Monetary policy: The first policy by the new RBI governor will be crucial, especially regarding interest rate cuts.
- FII activity: Continued selling by FIIs could put pressure on the market.
- Q4 results: Will the economy show signs of improvement or continued slowdown?
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Market movement in short, medium, and long term:
- Short term: The market could remain stable with support at 22,800-23,000 and resistance at 23,800-24,000. Investor sentiment is cautious due to tariff concerns and FII selling.
- Medium term: The RBI governor’s first policy and corporate results will be key in shaping market trends.
- Long term: March quarter results will be pivotal. If the Q4 results are positive, market concerns could ease. However, weak results could signal a prolonged slowdown, leading to continued market instability in 2025.
Impact of the tariff war:
The tariff war continues to pose risks, with retaliatory actions from China, Mexico, and Canada adding pressure. This could strengthen the dollar and weaken other currencies, including the rupee. If India faces tariffs too, FII selling could intensify, adding further pressure on the market.
Budget vs Global Factors: Who will prevail?
While the budget has been absorbed by the market, global issues like the tariff war will dominate. With reduced FII participation on budget day, the focus now shifts to how these global factors will impact India. Increased selling by FIIs could put the market under pressure, and it remains to be seen how the Indian market will navigate these challenges.
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