Expert view: Budget positive for investors; buy THESE 10 stocks for long term, says Prashanth Tapse of Mehta Equities | Stock Market News

Expert view: Prashanth Tapse, Senior VP of Research at Mehta Equities, views Budget 2025 as positive for investors, particularly as it favors consumption-driven sectors. While the income tax reduction aims to enhance the spending power of the middle class, measures such as increasing the FDI limit in the insurance sector and focusing on MSMEs are steps in the right direction.

In an interview with Mint, Tapse shared his insights on attractive sectors post-budget and recommended stocks to buy. Here are the edited excerpts from the interview:

What were the key takeaways of the Budget from the market’s perspective? What more could have been done?

From my understanding of the Finance Minister’s speech, no bad news is good news for the markets.

Expectations always run high, but past budgets have often led to disappointment.

This time, however, the focus was clearly on uplifting the middle class, which, in turn, could boost the economy through increased spending.

Meanwhile, the government benefits from indirect tax collection, such as GST, at every stage of this spending cycle.

Overall, the Budget appears positive for investors, particularly favouring consumption-driven sectors.

Key takeaways from the market’s perspective

(i) Focus on enhancing the spending power of India’s rising middle class to accelerate growth.

(ii) The FDI limit was raised to 100 per cent for the insurance sector.

(ii) The government will focus on greenfield airports and connectivity.

(iv) Measures for MSMEs and further emphasis on ‘Make in India’.

What sectors should we focus on now?

Investors should focus on consumption-driven sectors, as increased disposable income among middle-class consumers is expected to boost spending. Key sectors to consider include FMCG, automobiles, consumer durables, tourism, and hospitality.

The government clearly prioritises the growth of MSMEs. Should we expect a fresh rally in mid-and small-cap stocks?

The government has tried to focus on growth, but the middle class is at the bottom of the pyramid. A growing middle class can significantly boost a country’s economic growth rate because it is a major consumer group with disposable income.

This group drives demand for goods and services across various sectors, stimulating economic activity and contributing to overall GDP growth.

A fresh rally in the market or in mid and small-caps can come only after we see real earning growth.

As of this date, nine-month quarterly earnings are below street estimations. After the Budget’s focus on giving more cash to the common man, we can expect some recovery in Q1FY26E earnings, which would be reflected in the price action.

What will be the next key triggers for markets now?

For markets to recover, the biggest trigger would be real earnings growth, which has been absent from the last three quarterly earnings reports.

From a global perspective, we must wait and watch US President Donald Trump’s actions and reactions.

If India is excused from its tariff war, that would be the next biggest trigger for Indian markets’ recovery.

Long-term growth is intact, but we need to digest the pain of short-term volatility, mainly coming from the global market.

What should be our investment strategy now?

Long-term investors need not worry about short-term market volatility. Following the Budget, a prudent strategy would be to allocate 20-30 per cent of capital in the current market, prioritising fundamentally strong large-cap businesses. If market conditions deteriorate further, it may present additional buying opportunities.

Considering the budgetary announcements, could you please recommend some stocks to buy for the long term across segments?

From the FMCG space, buy Hindustan Unilever (HUL), Marico, and ITC. From the automobile sector, buy Mahindra and Mahindra and Hero MotoCorp. Havells and Voltas look attractive from the consumer durables space, while from the tourism and hotels segment, consider IndiGo, Lemon Tree Hotels, and Samhi Hotels.

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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.