Budget to boost consumption sectors, DeekSeek AI an opportunity for Indian IT firms
The Union Budget will boost consumption sector and long-term policies are favourable for urban housing, insurance and defence-related industries, according to a new report.
The capex budget has risen 15 per cent CAGR in the past 10 years and the allocation until 2030 is likely to exceed $1.2 trillion, according to managers at smallcase, a leading provider of investment products and platforms for the Indian capital markets industry.
According to them, large capex investments are likely to be beneficial for banks and specialised infra NBFCs.
“While most of the consumption focused companies are overvalued but consumer finance companies are available at a more reasonable valuation,” the report maintained.
On DeepSeek AI, smallcase managers said it has expanded the market for IT, but near-term growth rates and valuations are a concern.
IT remains an interesting play, with DeepSeek catalysing an extraordinarily large TAM (total addressable market) for Indian IT services companies.
With the cost of training new AI models being brought down to 1/30th to 1/50th of the earlier paradigm, this makes it possible for small and mid-sized companies and startups to develop new models and launch numerous products based on AI in the next 2-10 years.
This enlarges the market for Indian IT services many fold. However, with some uncertainty on the near-term growth rates and valuations slightly high, IT remains potentially alpha-generating, said the report.
Meanwhile, EVs and other means of mobility could provide interesting opportunities. Another sector which could be interesting due to the tax benefits and the budget focus on the sector is Tourism, especially, religious tourism.
“Toy industry is a $400 billion global market, with significant manufacturing happening in China. The budget has allocated funds for the toy manufacturing industry, which could lead to significant growth in the next 10-15 years,” said Ambareesh Baliga, veteran market expert and smallcase manager.
At a macro level, "we need the economy to clock over 7.5-8 per cent for long-term growth of the market and currency," he added.
