Budget 2025: STT, LTCG to Infra spending — top five expectations of Indian stock market from FM Nirmala Sitharaman

Budget 2025 expectations: The benchmark indices, Sensex and Nifty 50, extended their gains on Friday after the release of the Economic Survey for 2024-25. The survey, presented in Parliament, projected India's GDP growth at 6.3-6.8% for the 2025-26 fiscal year, driven by strong economic fundamentals, gradual fiscal consolidation, and steady private consumption.

On Friday, India's benchmark stock market indices climbed by 1% each as the Economic Survey 2025 was presented in Parliament. Finance Minister Nirmala Sitharaman unveiled the report in the Lok Sabha today, ahead of the Union Budget 2025-2026, which is set to be presented on Saturday, February 1, 2025.

Market experts suggest that India's FY25 budget is expected to lay the groundwork for positioning the country as a strong contender against China in global supply chains. It will also provide key insights into the government's priorities and financial strategies. The focus will be on the finance minister's policies aimed at maintaining fiscal stability, promoting inclusive growth, boosting infrastructure investment, advancing green initiatives, and implementing strategic tax reforms.

Here's what stock market investors are expecting from Union Budget 2025 -

No new Tax

Experts believe that its imperative for Finance Minister from imposing new taxes on investors.

"This year, it’s imperative for the Finance Minister to avoid introducing new taxes on investors. Instead, providing meaningful tax rebates to enhance consumer spending power could help revive the consumption cycle. Additionally, while higher capex allocations are welcome, the Budget should include clear quarterly timelines for actual spending. Without effective execution, increased allocations lose their impact.

Finally, if achieving these goals requires a temporary relaxation of the fiscal deficit, it should be considered a necessary trade-off for long-term economic growth," said Sunil Damania, Chief Investment Officer, MojoPMS.

STT or LTCG taxes

Investors are hoping the budget avoids tinkering with STT or LTCG taxes, as any hike might deter retail and foreign participation. A stable tax regime or relaxation in LTCG norms could further bolster sentiment.

“We do not anticipate any changes to the STCG, LTCG, and STT which again should be taken in a positive stride by market participants,” said Manish Chowdhury, Head of Research, StoxBox.

Push to consumer spending

In the current volatile market scenario and inflationary condition, there is an expectation that the upcoming budget might give some push to consumer spending through personal and capital gains tax rate cuts and a higher standard tax deduction limit.

According to Ajay Garg, CEO at SMC Global Securities Ltd, “With higher disposable income in hand, consumers tend to spend more which can raise the company’s earnings and boost market sentiments. Also, the lowering economic growth can be recovered with the expectation that the budget will increase the capital expenditure allocation by 10% -15%. This will directly promote roads, railways, and highways projects which can strengthen job creation and pave the way for holistic economic growth. With the rationalization of tax rates of different instruments, fiscal consolidation, and supportive growth policies, India can also win back the trust of FIIs.”

Infrastructure development

In recent years, the government has placed a strong emphasis on infrastructure development, increasing capital expenditure from 1.63% of GDP in FY2019 to 3.4% in FY2025. As India works towards achieving the vision of Viksit Bharat by 2047, it is expected that the government will maintain its robust focus on infrastructure investment, recognizing its crucial role in fostering overall economic growth.

Manish Chowdhury of StoxBox, expects the Union Budget to increase the budget allocation for the Ministry of Road Transport and Highways (MoRTH) by 5- 6%.

“This increase is expected to boost private investments in highway projects, particularly those awarded under the build-operate-transfer (BoT) toll model, with 20-25% of projects anticipated to follow this model. Additionally, the allocation will support MoRTH in accelerating highway construction and reducing the high debt levels of the National Highways Authority of India (NHAI),” Chowdhury said.

Boost to Railways

Chowdhury further anticipates that the government to boost the railway sector budget, with an anticipated 15-18 per cent increase in allocation for this segment.

In the 2024-25 budget, ₹2,62,200 crores were allocated to the railway sector, emphasizing passenger safety with the implementation of the Kavach anti-collision system and infrastructure development.

Introduction of new Vande Bharat and Amrit Bharat trains is expected, alongside an expansion of the Amrit Bharat Station Yojana, a scheme aimed at modernizing 1,275 railway stations with enhanced passenger amenities and contemporary designs.

From a budget perspective, the outlook for the railway sector remains positive, with RVNL, BEML, and IRFC identified as top picks by Manish Chowdhury.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.