Indian Shares Steady as Tax Relief Balances Capex Worries

Indian Shares Steady as Tax Relief Balances Capex Worries

Market Performance Overview

Indian stock markets ended nearly unchanged as investors reacted to the federal budget’s measures on capital expenditure and tax cuts. The Nifty 50 closed 0.11% lower at 23,482.15, while the BSE Sensex inched up 0.01% to 77,505.96.

Impact of Budget Announcements

The market fluctuated between gains and losses as investors assessed Finance Minister Nirmala Sitharaman’s budget. A smaller-than-expected increase in government capital expenditure disappointed infrastructure and industrial sectors, while personal tax cuts boosted consumer-focused stocks.

Capital Expenditure and Infrastructure Stocks Decline

The government allocated 11.2 trillion rupees ($130 billion) for capital expenditure in 2025-26, a modest increase from the previous year. Analysts viewed this as a marginal negative, leading to a decline in infrastructure and capital goods stocks.

• Larsen & Toubro dropped 3.3%
• PNC Infra declined 5.1%
• NBCC lost 4.7%

Market experts noted that increased consumer spending left little room for higher capital expenditure, affecting sentiment in the infrastructure sector.

Consumption-Oriented Sectors Rally

Personal tax rate cuts provided relief to consumers, driving gains in consumption-linked sectors:

• Fast-moving consumer goods (FMCG) sector rose 3%
• Auto sector climbed 2%
• Real estate stocks gained 3.4%

Mid-cap stocks shed 0.4%, while small-cap stocks edged up 0.4%.

Food Delivery and Restaurant Stocks Surge

Food delivery platforms and restaurant operators saw strong gains:

• Zomato surged 7.3%
• Swiggy gained 4.7%
• Restaurant operators (Sapphire Foods, Jubilant Foodworks, Devyani International) climbed 2.6%-6.5%

Footwear and Tourism Stocks Gain

The government’s plan to support the leather industry and develop tourism infrastructure boosted related stocks.

Insurance Stocks Decline

Insurance stocks fell as new tax benefits could reduce the attractiveness of tax-saving insurance products.

Market Sentiment Post-Budget

The budget broadly met expectations, allowing investors to pause after a 3% rally in the last four sessions. While consumption-driven sectors benefited from tax cuts, infrastructure and industrial firms struggled due to the modest capex increase.

“Indian Shares Steady as Tax Relief Balances Capex Worries” “Indian Shares Steady as Tax Relief Balances Capex Worries”