How Budget Affects Stocks Market | Investing Strategy

Decoding the budget + our favourite picks →

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Today in less than 5 minutes:

1) Top themes + stocks to invest in, inspired by yesterday's budget
2) Stock in Spotlight: A company that will help India achieve its green energy goals
3) How much did each ministry bag from the interim budget?

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Takeaways from the 2024-25 Interim Budget

February 1st, 2024 - Everyone was glued to their TVs from 11 AM to 12 noon. Because at that time, Finance Minister Nirmala Sitharaman set the stage for a temporary financial plan until the new government took over. Not to mention that plan was called the ‘Interim Budget for 2024-25’.

Let’s look at what it had in store, plus its impact on the stock markets 📈

By the way, you can understand the impact of different macroeconomic factors and learn to evaluate whether the stock markets are overvalued or undervalued in our Stock Market Valuations course.

Fiscal responsibility > populism

Unlike the big bank populist measures predicted by most, the binding government chose a path of fiscal consolidation and macroeconomic stability. Some major highlights:

> The total size of the budget stands at ₹47.66 lakh crores for FY25, 6.1% greater than the revised estimates for FY24. To be precise,

Source: Moneycontrol

> Adhering to the 2047 vision of making India a $5 trillion economy, the capital expenditure budget was raised by 11.1% from last year to a figure of ₹11.11 lakh crores, supporting the infrastructure growth story.

> Despite it being a pre-election budget, FinMin Sitharaman chose fiscal prudence by announcing the target fiscal deficit as 5.1% of the GDP for 2024-25, beating all estimates.

> The status quo was maintained for the tax structure, including import duty. Existing tax slabs are retained, and this move falls in line with the goal of fiscal consolidation.

4 post-budget themes to invest in

After looking at the budgetary allocations for different ministries and various schemes announced, these sectors/themes can be deemed as the ‘best’ for investments:

🔋 Paving the way for a green revolution

Under the Pradhanmantri Suryodaya Yojana, households will be entitled to 300 units of free electricity every month, boosting the ongoing rooftop solarisation program. The budget also provided funding for the development of offshore wind power, mandated CNG & biogas blending, and extended its support in expanding the EV ecosystem, all in line with the government’s ambitious goal of installing 500 GW of non-fossil fuel capacity by 2030.

Top green energy stocks in focus:

There’s one more stock we liked in this space, we even posted about it on our socials last week, read on to find out!

Learn to invest in the green energy sector from Mr. Arvind Kothari in his Green Energy Investing Course. His green energy smallcase has delivered a 78% CAGR in the past 3 years. Use “STOCK10” for a 10% discount & get the course for just ₹359.

🏠 ‘Everyone deserves a home’

The budget announced that a new scheme would be launched to help deserving sections of the middle class buy or build their own houses, while 20 million homes in rural areas would be constructed, igniting the lateral demand in housing and allied sectors. The enthusiastic infrastructure spending is also expected to indirectly boost housing in the adjunct areas.

Though the lack of a big, direct benefit caused realty stocks to dip during the budget day, we believe the following will be the top focus when it comes to infrastructure & allied sectors:

🏝️ Making India a tourist favourite

Not only did the budget announce interest-free loans to states for developing and promoting tourism, but its ongoing effort to improve connectivity, as confirmed by the major announcements for the railways, highways, and airports confirms its commitment towards making India a tourist destination.

Tourism favourites:

The budget also incentivized spiritual tourism, you must remember the mega inauguration of the Ayodhya Ram Mandir.

⚡️ Defence - ongoing support for this sunrise sector

Bagging the highest allocation of ₹6.2 lakh crores, this budget is to be spent on pensions, as well as for the modernization of the armed forces. To propel indigenous innovation and the advancement of cutting-edge technologies, a new scheme for strengthening deep-tech technologies would be launched. This marks the government’s devotion to uplifting the defence sector.

Defence favourites:

Which other stocks do you think will run up because of the budget? Tell us by replying to this email!

Learn how Mr. Arvind Kothari, founder & director of Niveshaay, and an equity research practitioner for 12+ years picks multi-bagger stocks in his Multibagger Stock Selection Course. Use “STOCK10” for a 10% discount & get the course for just ₹359. 

Note that none of the above stock ideas are intended as recommendations. Do your own research before investing.

Stay tuned to our Instagram & YouTube for next week’s Stock in Spotlight!

Did you like the budget?

Which parts of the budget did you like and dislike? Reply to this email and let us know!

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