Expert View | Pro-growth policies, clarity on long-term taxation in Budget 2025 to stabilize markets: Narinder Wadhwa | Stock Market News

Expert View: India Inc and stock market participants await the presentation of the Union Budget 2025 in the coming week amid broad expectations for policy announcements to boost the slowing economy. Market participants are hopeful for robust measures to drive urban consumption and lower income tax slabs for the middle class while maintaining fiscal discipline.

Ahead of the Union Budget on February 1, Narinder Wadhwa, Managing Director & CEO of SKI Capital, said in an interview with Mint’s Nikita Prasad that he expects Budget 2025 to focus on demand revival and higher spending on infrastructure, healthcare, and rural development. The D-Street expert believes the stock market sentiment will stabilize with pro-growth policies and clarity on long-term taxation provided in the upcoming Budget.
 

Edited excerpts from the interview:

Q: What are your major expectations from the upcoming Union Budget 2025? How will the policy announcements of Budget 2025 impact the Indian stock market, which has been reeling under heightened volatility for the past few months?

A: The Union Budget 2025 will focus on demand revival, economic expansion, and bolstering investor confidence. Key expectations include higher fiscal spending in infrastructure, healthcare, and rural development to boost job creation and consumption, and potential tax reforms to enhance disposable incomes and stimulate demand.

Also Read: Union Budget 2025: Top 10 moves that could benefit every middle-class homebuyer

Measures to support private investment, such as incentives under PLI schemes and public-private partnerships, are also expected. Some pro-growth policies and clarity on long-term taxation could stabilize stock market sentiment, provided the fiscal deficit is managed effectively.

Q: With Budget 2025, which sectors will likely receive the highest budgetary allocation? For investors tracking sectoral insights, which sectors present the best opportunities and which are most affected?

A: Sectors like infrastructure, renewable energy, rural development, and defence are expected to receive the highest budgetary allocations. Infrastructure investments in roads, railways, and urban development are likely priorities, while renewable energy may see increased funding for green hydrogen and solar projects. For investors, infrastructure and capital goods present strong opportunities, while export-dependent sectors such as IT and textiles could face global uncertainties and potential tariff-related risks.

Q: India’s retail inflation has eased for the last two months, while Jerome Powell-led US Federal Reserve has cut rates for three straight meetings. When do you think the RBI will reduce policy rates, and how will markets react to rate cuts?

A: The RBI will likely reduce policy rates in the February 2025 MPC meeting, provided inflation remains within target. Factors influencing this decision include dovish global trends and weak domestic demand. A rate cut would likely boost sentiment in interest-sensitive sectors such as real estate, automobiles, and capital goods. Lower borrowing costs would encourage private capex and improve corporate earnings, stabilizing the market.

Also Read: Union Budget 2025: Budget session of Parliament from January 31; Check dates, full schedule

Q: How will US President Donald Trump’s tariff policies and other announcements impact India’s trade relations with the US? How will it impact India’s economy and financial markets?

A: Trump’s tariff policies may have mixed effects on India. Aggressive tariffs could disrupt supply chains in sectors like electronics and textiles, but Indian manufacturers might benefit from companies seeking alternatives to Chinese suppliers. 

Tariffs could increase exporters’ costs, though IT services may gain as US corporations outsource to control expenses. Financial markets could face volatility due to trade uncertainties, but a stable US economy may indirectly support global markets, including India.

Q: How do you see India’s macroeconomy in 2025 amid global triggers? How do you see the inflation and growth trajectory panning out in 2025?

A: India’s macroeconomic outlook for 2025 depends on domestic recovery efforts and global challenges. India’s GDP growth is expected to improve gradually, aided by government spending and private investments. 

Inflation has eased, but risks like global energy prices and supply chain disruptions persist. Inflation should stay within the RBI’s target range if crude prices remain stable. Despite challenges, India will likely maintain a balance between growth and inflation.

Also Read: India FY25 GDP: Indian economy poised to grow 6.6% in FY25 on revival in urban, rural demand: RBI Report

Q: Are you worried about stretched valuations in Indian markets? What kind of trading strategy should investors adopt amid market volatility?

A: Stretched valuations in sectors like FMCG and technology are concerning, especially where earnings growth may not justify current prices. However, government-driven sectors such as infrastructure and capital goods remain attractive. Investors should focus on fundamentals, diversify portfolios, and adopt phased investments. Monitoring external risks like US trade policies and global interest rates is also essential. A disciplined approach can help investors capitalize on long-term opportunities despite volatility.

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, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.