During the Union Budget 2025 the Indian middle class received notable tax cut benefits yet investors responded moderately to this announcement. The investors failed to express immediate desire for the financial policy announcement despite expectations that it would improve disposable income and domestic consumption. Economists predict the effect could beneficial for the long run even while international investors keep their distance because of economic issues.
The middle-class section of India saw substantial tax reductions and savings benefits from Budget 2025.
Finance expert Akshat Shrivastava from Wisdom Hatch outlined the significant effects that tax reductions would have according to his analysis. Utilizing your annual income of ₹12 lakh will lead to tax savings between ₹80,000 to ₹1 lakh according to his explanation. The tax reductions implemented by the Finance Minister will give 1.4 crore taxpayers a total savings amounting to ₹1.4 lakh crore.
The surplus funds will become the catalyst for boosting homegrown consumption across India as Shrivastava predicted. Additional consumption following the market boost would create business growth potential based on economic theory.
Stock Market Response: A Lukewarm Reaction
The monetary advantages of the budget did not motivate Indian stock market investors to show significant interest in the announcement. The Indian stock market showed limited reaction to budget-related news as the Sensex reached 77,506 points with minimal growth of 5 points and Nifty decreased below 23,482 points.
According to Shrivastava the Indian market has not generated positive reactions from the stock market because it remains uninviting to foreign investors. Global investors doubt India’s future growth prospects because the country has achieved lower-than-anticipated economic development which undermines emerging market attractiveness to foreign investors.
The market shows signs of potential optimism because of enhanced consumer spending.
The reaction in stock markets is low but Shrivastava proceeds with cautious optimism. He advocates that growing private consumer demand may eventually create an environment that improves investor trust. When private consumption increases in India it should encourage foreign investors to recognize profitable return opportunities in the country. Waiting and observing was his advice.
The stock market needs stronger signals from the consumption sector before executing substantial market movements according to market analysts.
Expert Opinions: Mixed Sentiments on Market Trends
Information from Geojit Financial Services Head of Research Vinod Nair shows the market showed a lackluster response because the capital expenditure (capex) for FY26 increased by only 10% year-over-year through a rate that was lower than market anticipations.
The market showed restrained behavior because defense and railway and infrastructure sectors exhibited minimal performance effect. Nair explained that consumption-based sectors registered limited impact on the market because their total share within the market remains low.
The next trading session may see the Union Budget produce influence on stock prices and mainly affect consumption-based industries according to Ajit Mishra, Research Senior Vice President at Religare Broking. The index will stay close to its present position because market participants need additional signals that the upcoming earnings season will provide for setting future market sentiment.
Looking Ahead: Will the Market React Later?
The Union Budget 2025 delivered benefits to taxpayers but its complete impact on both the Indian economy and stock market has yet to become apparent. A rise in domestic consumption should lead to enhanced corporate earnings and better market sentiment according to the increased spending power of the population. Foreign investor sentiment will probably adapt according to how India develops as an economic power.
Everyone will monitor economic statistics and worldwide investment patterns and enterprise operation data until they feel comfortable making major financial decisions. The potential duration of the stock market increase due to tax relief remains uncertain.
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