Budget: Dos and Don'ts for Equity Investors

Those who fancy a flutter in the stock market should gird themselves with the fundamentals before diving in

- Abhishek Mukherjee

India is currently in the midst of two extremely rare occurrences. First, Prayagraj is hosting the Maha Kumbh, which occurs once in 144 years. And second, the middle-class is actually feeling cheery after a Union Budget.

For decades, India's salaried class viewed themselves as a minority-sandwiched between the elite and what they believe is the world's largest population of the "politically pampered". And in most Budgets, they found the discourse to be dominated by farmers, the poor, women and other groups.

Which is why the record ₹1 trillion largesse showered by Union Budget 2025-26 on middle-income earners appears to be a veritable mini-revolution in recent policymaking. It can also be a sizeable opportunity for equity investors-if they play their cards right.

Double-Engine Benefit

A key characteristic of Indic thought is the multiplicative intensity of morals. Do good, and it will compound in abundance in your Karmic ledger. Curiously, the same principle finds resonance in economics.

When finance minister Nirmala Sitharaman announced tax rebates making income of up to ₹12.75 lakh tax-free and savings for those above this threshold, she not only delivered a cash transfer of ₹1 trillion from the state exchequer to the common man but set in motion a virtuous cycle, which will culminate in the economy benefiting by a sum much higher than the original stimulus.

How? Through something called the Marginal Propensity to Consume (MPC).

The MPC measures the proportion of additional income an individual spends on consumption. In simple words, if the tax rebate puts an additional ₹50,000 in your hands, and you spend ₹30,000 of that money on gadgets and eating out, your MPC is 0.6, as you have spent 60% of the additional income.