Sensex, Nifty: Stock market rises as FM tables Budget 2025; here's why

Budget 2025: Benchmark stock indices Sensex and Nifty resumed adding to Saturday's gain, as the Finance Minister Nirmala Sitharaman kicked off her eighth Budget and the first full-year Budget of the Modi government's third term. Stocks gained, as investors optimisticly awaited the Budget announcements, especially on capital market taxation and income tax.

In her initial Budget speech, the FM announced PM Dhan Dhyan Krishi Yojana, covering 100 districts with low yields, modern crop intensity and below average credit parameters. She said the scheme will benefit 1.7 crore farmers. Sitharama said the Budget 2025 would initiate reforms in six domains namely taxation, urban development, mining, financial sector, power and regulatory. Indian economy is fastest growing among all developing economies, she said, while presenting the Budget for FY26.  "Together we embark on journey to unlock our potential for greater prosperity," she added.

The BSE Sensex rose 247.81 points or 0.37 per cent to 77,748.38. Nifty added 74 points, or 0.32 per cent, to 23,582.85. The stock market were keeping expectations low from the Budget this time.

The FM said the government focus would be on Garib (Poor), Youth, Annadata (Farmers) and Nari (Women). Also focus would be on make in India, Export, Innovation, Investment and Reforms. The focus, she said, would be innovation, crop diversification, post-harvest, improve irrigation, long and short term credit.

Sitharaman said a national mission of high yielding seeds will be launched. A Makhana Board will be established in Bihar to improve production and processing of fox nut, she said.

Share investors were looking at abolition of Security transaction tax (STT) and an increase in tax exemption in the case of Long term Capital Gains tax (LTCG) to Rs 2 lakh from Rs 1.25 lakh currently. While they were expecting no change in short-term capital gains tax (STCG), as taxpayers, they were looking for some relief on personal income tax front. Investors were awaiting for Budget details.

Based on Economic Survey, Nirmal Bang Institutional Equities believes that the priorities in the Budget and beyond are likely to be ease of doing business and deregulation for MSMEs, strengthening the resilience of domestic supply chains and backward integration and encouraging domestic investments in clean and green technologies and energy transition related industries. It also sees strengthening of FDI in India and improving productivity of investments as key Budget themes.

Among Sensex stocks, IndusInd Bank rose 2.25 per cent to Rs 1,014 at 11.10 pm. UltraTech Cement, Mahindra & Mahindra, NTPC Ltd, ITC Hotels, Sun Pharma and Asian Paints advanced up to 2 per cent. The sentiment was positive across the broader market, with 2,300 shares rising and about 740 shares trading in the red.

"On the Budget day, the market reactions will be quick in response to Budget announcements. A major expectation from the Budget is a cut in personal income tax to provide relief to the middle class and boost consumption, thereby facilitating growth recovery. The extent of the tax relief remains to be seen. The fact is that there is no fiscal space for big relief," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Vijayakumar said the market will be looking for growth stimulating measures and not market-related taxation reliefs like changes in the capital gains taxation.