Boost To Consumption, But Don't Buy Blindly

With the budget putting more money into the hands of people to boost consumption and increasing foreign direct investment in insurance, certain consumer-oriented sectors, such as FMCG, auto, as well as manufacturing are expected to do well, but think before investing

- Kundan Kishore

The most anticipated event in recent months is now behind us. The stock market has been under pressure due to higher valuations and lower earnings, and economic growth for quite some time now. After the US Presidential election, all eyes were on the Budget announcement; and now that it's out, the reaction has been mixed.

The major indices, Nifty and Sensex closed flat. However, some consumer-oriented, sector indices cheered the Budget announcement.

HEALTHY MACRO INDICATOR

On the key macroeconomic front, the government has outperformed its own estimates. The fiscal deficit for the financial year (FY) 2025 is 4.8 per cent, against the estimated 4.9 per cent. For the coming year, the government has projected it to be around 4.4 per cent.

On the other hand, Union Minister of Finance, Nirmala Sitharaman, announced in her Budget Speech that taxpayers earning income up to ₹12 lakh will not have to pay any income tax. These twin announcements bodes well for the overall economy.

Says Vishal Kapoor, CEO, Bandhan Mutual Fund: "While maintaining the glide path towards fiscal consolidation, the reduction in income tax puts more disposable income in the hands of taxpayers, stimulating domestic household consumption and ensuring more savings are channeled to productive financial assets that facilitate wealth building, thus helping more savers become investors."