The Union Budget 2025-26 received a lukewarm response from the markets, with sectors like auto, FMCG, and consumer durables witnessing significant rallies following the announcement of major income tax relief for the salaried class. The new tax exemption of up to Rs 12 lakh per annum is expected to boost consumption in these sectors.
On Saturday, the benchmark indices closed marginally lower in a volatile trading session. The BSE Sensex ended at 77,505.96, while the Nifty 50 settled at 23,482.15. The market experienced volatility during the budget session, with consumption-driven sectors gaining momentum while infrastructure and energy stocks faced selling pressure.
Among the top gainers on the National Stock Exchange, Maruti Suzuki led with a 6.05 per cent surge, followed by Trent (5.82 per cent), ITC (3.75 per cent), Britannia (3.42 per cent), and Eicher Motors (2.90 per cent). The major losers included Larsen & Toubro and Bharat Electronics Limited, both declining 3.59 per cent, followed by Coal India (-2.65 per cent), ONGC (-2.34 per cent), and Power Grid (-2.15 per cent).
Sector-wise performance showed strength in consumption-related sectors, with Nifty Auto gaining 1.91 per cent, FMCG up 3.01 per cent, Media rising 2.21 per cent, Realty advancing 3.38 per cent, and Consumer Durables climbing 2.96 per cent. The rally in the consumer durables sector was particularly noteworthy due to the budget’s focus on domestic manufacturing through import duty adjustments. The banking sector, however, remained under pressure, with Nifty Bank closing at 49,506.95, down 0.16 per cent.
Vinod Nair, Head of Research at Geojit Financial Services, commented that the market had a mixed view of the budget, citing the modest 10 per cent YoY increase in capex for FY26 as falling short of expectations. He noted that sectors like railways, defense, and infrastructure were affected, while consumption-based sectors showed positive momentum.
In the broader market, the Nifty Next 50 index gained 0.60 per cent to close at 63,503.10, while the Nifty Midcap Select index declined 0.56 per cent to 11,864.60. Overall market breadth remained positive, with 2,081 stocks advancing and 1,829 declining on the BSE. Sixty-two stocks hit their 52-week highs, while 72 touched their 52-week lows. Nine stocks hit the upper circuit, and six hit the lower circuit.
Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, highlighted that while the budget did not significantly impact the markets, sectoral stocks in consumer durables, FMCG, and the automobile space attracted significant buying interest after the announcement of income tax relief. He advised investors to monitor global developments, as any increase in US bond yields and FII selling could affect sentiment.
The technical outlook is cautiously optimistic, with Shrikant Chouhan, Head of Equity Research at Kotak Securities, pointing out that the short-term market texture is bullish. He mentioned key support zones at 23,270/77,000 and 23,100/76,500, with resistance areas at 23,810/78,500 and 23,900/78,800.
The India VIX, which measures market volatility, decreased by 13.24 per cent to 14.10, indicating reduced market nervousness. According to Ajit Mishra, SVP Research at Religare Broking Ltd, the impact of the Union Budget is likely to persist in the next session, particularly in the consumption sectors.
Satish Chandra Aluri from Lemonn Markets Desk noted that the tax relief measures in the budget would result in a revenue loss of approximately Rs 1 lakh crore, benefiting domestic consumption. However, to maintain fiscal balance and achieve the targeted fiscal deficit of 4.4 per cent of GDP for FY26, the government opted for a modest increase in capital expenditure.
Looking ahead, market participants are focusing on the upcoming RBI monetary policy meeting and ongoing quarterly earnings season for further direction. Technical analyst Nagaraj Shetti from HDFC Securities suggested that with bulls surpassing the hurdle of 23,500 levels, they could advance towards another resistance at 23,800 levels in a short period, with immediate support at 23,400 levels.
