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Below the Quote on Budget Reaction by Pranav Haridasan, MD and CEO, Axis Securities

The Union Budget for 2025-26 largely played to our expectations, particularly with the much-needed income tax relief for the middle class, which will drive consumption and economic growth. No changes were made to Securities Transaction Tax or capital gains tax, as anticipated.

On capital expenditure, while the budgeted figure of Rs.11.2 lakh crore for FY26 may seem conservative compared to last year’s Rs.11.1 lakh crore, it’s important to note that actual spending in FY25 is likely to fall short of the budgeted target. Even with a measured approach this year, capex is still set to grow by over 10% from the previous year’s realized levels, with the focus rightly shifting to execution. Additionally, grants to states is +40%, INR 4.3 lakh crores, which will also significantly aid capex.

Sectorally, this budget is particularly positive for consumer and consumption-driven stocks, which have underperformed recently but now stand to benefit from a demand revival. Financials also present a strong opportunity, acting as a key proxy for economic growth. With the recent correction in both sectors, they offer significant value for investors.

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