Sensex, Nifty50 open higher ahead of Budget 2025: Here’s what D-Street expects from FM Nirmala Sitharaman

Ahead of the highly anticipated Union Budget 2025, Indian share market opened higher on special trading session on Saturday, undermining negative closing at Wall Street overnight. The exchanges have decided to operate today in wake of the Union Budget 2025-26. Finance Minister Nirmala Sitharaman is set to table the first full-fledged budget of the Modi 3.0 government in Parliament at 11 AM today.

The BSE Sensex opened 136 points higher at 77,637 and the NSE Nifty belled the day at 23,528.60, up 22 points. Post opening, the benchmark indices slipped into negative terrain as investors turned jittery ahead of the Budget presentation.

The top gainers on the BSE Sensex pack were Sun Pharma, Adani Ports, ITC Hotels, IndusInd Bank, and Ultratech Cement, rising up to 1% in early trade. On the other hand, Titan, Kotak Mahindra Bank, Nestle India, Asian Paints, HCL Tech, and TCS were among notable losers, falling marginally below opening level.

The sentiment was further dented by weak cues from U.S. market, which ended lower overnight after the U.S. President Donald Trump administration confirmed that tariffs on Mexico and Canada would take effect from February 1. Trump has also warned BRICS countries that they will face 100% tariffs if they replace the U.S. dollar with their other currency. On Friday, the Dow Jones Industrial Average ended 0.75% lower, the S&P 500 dropped 0.5%, and the Nasdaq Composite lost 0.3%.

Back home, the Dalal Street has maintained buying momentum for the last four sessions, with Sensex and Nifty rising nearly 3% during this period amid hope that the government would strike a balance between fiscal deficit, capex for growth and social spending to revitalise the world’s fifth largest economy. On Friday the domestic bourses closed higher on January 31, with the Sensex rising 0.97% to 77,500 points, and the Nifty gaining 1.11% to 23,508.4 points. The broader markets saw even stronger gains, with the BSE MidCap and SmallCap indices surging over 3.5% each.

Here’s what Dalal Street expects from Union Budget 2025

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, says V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

He says he market will be looking for growth stimulating measures; not market-related taxation reliefs like changes in the capital gains taxation.

“The market response to the Budget will not last more than a few days. Trends in growth and earnings recovery will dictate the medium to long-term market direction," he adds.

The market seeks support from the government in the form of rationalisation of transaction costs and simplification of tax structures to make domestic equity market the most preferred avenue for trade and investments.

The Association of Mutual Funds in India (AMFI) has proposed to reduce short-term and long-term capital gains (STCG and LTCG) taxes and lowering the securities transaction tax (STT). Additionally, it has urged the government to bring back indexation benefits, which could encourage long-term investments in equity and mutual funds.

Emkay Securities in a report says that the budget may offer mild sweeteners on personal taxes and concessional corporate tax scheme for manufacturing hubs/FDIs, while RBI dividend may stay solid. Policy focus may move to re-establishing consolidated debt/GDP as the anchor ahead. “We maintain that boosting asset sales (via functional infrastructure monetization, disinvestment, and strategic sales) and better resource allocation are the least growth-impinging instruments of fiscal consolidation.”

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