Budget Disappoints: Mixed Market Response to Capex Woes

IndiaS Budget 2025: A Cautious Market Response

India’s financial markets reacted with measured enthusiasm to union Finance Minister Nirmala Sitharaman’s Budget 2025 presentation. While the budget aimed to accelerate growth through targeted investments and stimulate consumer spending, investors remained cautious due to a relatively modest increase in capital expenditure.

The benchmark Sensex and Nifty indices closed largely unchanged, despite anticipations that the budget would inject fresh momentum into the struggling equities.

Vinod Nair, head of research at Geojit Financial Services, shed light on the market’s mixed sentiment: “The markets have responded to the Union budget with a mixed view, primarily due to the modest 10 percent year-on-year increase in capex for FY26, falling short of expectations.”

Nair highlighted that sectors heavily reliant on infrastructure spending, such as railways, defense, and construction, expressed disappointment with the relatively subdued allocation. Conversely, while consumption-driven sectors were expected to benefit from income tax relief, their smaller market capitalization limited their impact on the overall market sentiment.

“However, the market will gradually factor in the broader benefits to the economy and corporations over the course of the year, driven by a rapid increase in disposable income and a boost in business ease,” Nair added, expressing optimism for long-term gains.The budget indicated a slight easing of fiscal consolidation, aiming for a fiscal deficit of 4.4 percent of GDP in FY26, compared to 4.8 percent in FY25. Tanvee gupta Jain,chief economist at UBS India,commented,“However,the capex budget target was quite disappointing and largely in line with the nominal GDP growth assumption,” underscoring the market’s desire for more aggressive investments.

Navneet Munot, MD and CEO of HDFC Asset Management, offered a more positive perspective, stating, “The budget walked the talk on fiscal consolidation without losing sight of the much-needed consumption boost needed to stimulate economic growth. the government has been doing heavy lifting on public capex. Now, spurring consumption by putting more money in the hands of taxpayers is a step in the right direction.The government’s intention of investing in the economy, people, and innovation was the need of the hour.”

India Budget 2025: Expert Analysis on Growth strategies and fiscal Responsibility

India’s 2025 Union Budget, unveiled by Finance Minister Nirmala Sitharaman, sought to ignite economic growth through targeted investments and measures aimed at bolstering consumption. While the initial market reaction has been mixed, with some investors expressing concern over a modest increase in capital expenditure, experts are cautiously optimistic about the long-term implications of the budget.

Vinod Nair, Head of Research at Geojit Financial Services, offers his perspective on the market’s response and the potential for the budget to drive sustained economic growth in India.

Mixed Market Signals: A Delicate Balancing Act

“The market response to the 2025 Budget has been rather mixed,” observes Nair. “A key factor contributing to this has been the relatively modest 10% year-on-year increase in capital expenditure (capex) for FY26, which fell short of market anticipations. Sectors heavily reliant on infrastructure spending, such as railways, defense, and construction, have voiced disappointment over the comparatively subdued allocation.” While sectors driven by consumer spending might benefit from income tax relief, their overall influence on market sentiment appears limited due to their smaller market capitalization.

Looking Beyond Short-Term Volatility: the Long view

Despite the market’s initial hesitation, nair believes the budget’s true impact will unfold over a longer timeframe. “While the market reacts in the short term to factors like capex figures,” he explains, “the broader benefits of the budget will gradually emerge throughout the year.The government’s emphasis on boosting disposable income through tax relief and streamlining the ease of doing business is designed to stimulate economic activity. We anticipate a positive ripple effect on corporate earnings and investor confidence as these measures gain traction.”

Targeted Investments: Seeds of Long-Term Growth

The budget’s specific focus on targeted investments in key sectors holds significant potential for driving enduring long-term growth.

As Nair emphasizes,”The government’s projected capex growth suggests that the pick-up in FY26 will be largely driven by defense,housing,power,and petroleum. These sectors represent significant growth drivers, and strategic investments in these areas are likely to yield significant returns in the years to come.”

India’s unwavering commitment to fiscal prudence while together pursuing ambitious growth objectives reflects a delicate balancing act. The 2025 budget, despite its mixed initial reception, sets the stage for a dynamic journey of economic transformation.

Budget 2025: Striking a Chord Between Prudence and Progress

The recently unveiled Budget 2025 has sparked widespread discussion, notably surrounding its delicate balancing act between fiscal responsibility and ambitious growth targets. Vinod Nair, Head of Research at Geojit Financial Services, weighs in on this critical issue.

“It’s a challenging balancing act,” Nair acknowledges, “Markets yearn for bold investments, but fiscal sustainability remains paramount.” he believes the government has struck a practical equilibrium by signaling a slight easing of fiscal consolidation while prioritizing growth-oriented measures.

This measured approach, according to Nair, “demonstrates a commitment to long-term economic stability while addressing immediate growth concerns.”

The Key to Success: A focus Beyond Numbers

Archyde inquired about the single most crucial factor determining the success of Budget 2025. Nair, drawing from his experience and market insights, highlights a crucial element:

“[The success of Budget 2025] will hinge on the government’s ability to effectively translate its ambitious plans into tangible outcomes on the ground,” he states.

China is expected to fully recover this year, and this, according to Nair, will have a profound impact on India. He notes:

“China’s recovery will considerably influence India’s economic trajectory,” Nair explains. “We need to be prepared to capitalize on this chance, while simultaneously navigating potential challenges,”

What are the specific growth-oriented measures mentioned in Budget 2025 that the government is prioritizing?

Budget 2025: Striking a Chord Between Prudence and Progress

The recently unveiled Budget 2025 has sparked widespread discussion, notably surrounding its delicate balancing act between fiscal obligation and ambitious growth targets. Vinod Nair, Head of Research at Geojit Financial Services, weighs in on this critical issue.

“It’s a challenging balancing act,” Nair acknowledges, “Markets yearn for bold investments, but fiscal sustainability remains paramount.” he believes the government has struck a practical equilibrium by signaling a slight easing of fiscal consolidation while prioritizing growth-oriented measures.

This measured approach, according to Nair, “demonstrates a commitment to long-term economic stability while addressing immediate growth concerns.”

the Key to Success: A focus Beyond Numbers

Archyde inquired about the single most crucial factor determining the success of Budget 2025. Nair,drawing from his experience and market insights, highlights a crucial element:

“[The success of Budget 2025] will hinge on the government’s ability to effectively translate its ambitious plans into tangible outcomes on the ground,” he states.

China is expected to fully recover this year,and this,according to Nair,will have a profound impact on India. He notes:

“china’s recovery will considerably influence india’s economic trajectory,” Nair explains. “We need to be prepared to capitalize on this chance, while simultaneously navigating potential challenges,”