Stocks to Watch Before Budget 2025

resr 5paisa Research Team

Last Updated: 29th January 2025 - 06:16 pm

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The Union Budget, a defining annual event in India, has a profound impact on the economic landscape, influencing stock market movements across various sectors. As Budget 2025 approaches, investors are closely monitoring the sectors likely to receive favorable attention in the government's financial allocations and policy measures. This presents a prime opportunity to identify stocks poised for growth based on these expected budgetary decisions. In this article, we explore the stocks you should keep an eye on before the Union Budget 2025 is announced.

Renewable Energy Sector Stocks

With the Indian government ramping up its commitment to reducing carbon emissions and expanding green energy initiatives, the renewable energy sector is expected to continue its growth trajectory in Budget 2025. The Ministry of New and Renewable Energy (MNRE) has already been allocated significant funding, and further support is anticipated.

The government is likely to announce fiscal incentives to encourage local manufacturing of solar panels, green hydrogen production, and R&D activities. Additionally, there may be measures to attract foreign investments and strengthen international collaborations, especially as India aims to achieve 500 GW of renewable energy capacity by 2030.

 

The government is expected to outline a roadmap for carbon neutrality by 2070, including R&D incentives, global collaborations, and tax breaks for green projects.

Stocks to Watch:

  • NTPC
  • Adani Green Energy
  • JSW Energy
  • Adani Power

 

Infrastructure Sector Stocks

The Indian government has been aggressively expanding infrastructure development, with a record allocation of ₹11.11 lakh crore in Budget 2024. In Budget 2025, increased capital outlays, accelerated asset monetization under the National Monetization Pipeline (NMP), and policy measures to enhance private-sector participation may be expected.

The infrastructure sector is expected to remain a core focus of the Union Budget, with the government likely to allocate substantial funds for roads, railways, and urban development projects. Given the steady increase in capital outlay for infrastructure, companies operating in the construction, transportation, and railway sectors are set to benefit.

Stocks to Watch:

  • Afcons Infrastructure
  • IRB Infrastructure
  • Larsen & Toubro
  • Rail Vikas Nigam

 

Defence Sector Stocks

The Indian defense sector remains a strategic priority for the government, with expectations of increased capital expenditure to boost the sector’s self-reliance and "Make in India" initiatives. Budget 2025 could see a focus on upgrading military equipment, aircraft, and naval vessels, as well as increasing investments in defense technology R&D.

As the government pushes to reduce its dependence on imports, local defense manufacturers are likely to benefit from increased government procurement and participation in public-private partnerships.

Stocks to Watch:

  • Mazagon Dock Shipbuilders
  • Cochin Shipyard
  • Bharat Electronics
  • Hindustan Aeronautics Limited (HAL)

 

Insurance Sector Stocks

The insurance industry is looking forward to major policy reforms in Budget 2025, aligning with India’s “Insurance for All by 2047” vision.

Several industry expectations include:

  • GST reduction on insurance premiums to make health and term insurance more affordable.
  • Higher tax exemptions under Section 80C for life insurance and Section 80D for health insurance premiums.
  • Increased FDI limits to attract foreign capital and expand market penetration.
  • Composite licenses for insurers, allowing them to offer multiple types of policies under one entity.

The government’s focus on boosting insurance penetration beyond the current 3.7% may drive significant growth opportunities for companies in this space.

Stocks to Watch:
 

  • Life Insurance Corporation Of India (LIC)
  • SBI Life Insurance 
  • HDFC Life Insurance
  • ICICI Prudential Life Insurance

Technology Sector Stocks

Technology continues to be a critical driver of economic growth in India, with artificial intelligence (AI) emerging as a key transformative force. Budget 2025 is expected to introduce measures to support innovation, including incentives for AI research and development, and policies to boost domestic manufacturing of electronics and AI infrastructure.

Additionally, the tech industry is pushing for the creation of a dedicated deeptech fund to encourage venture investment in startups, especially those with longer gestation periods. Nasscom advocates for a fund-of-funds structure, which would provide "patient capital" to deeptech startups over extended periods. Furthermore, adjustments to the safe harbour rules and SEZ reinvestment reserves are expected to offer more flexibility for tech companies in Special Economic Zones (SEZs), enhancing the sector’s growth prospects.

Stocks to Watch:

  • Infosys
  • TCS
  • HCL Technologies
  • Wipro

 

Conclusion

The Union Budget 2025 holds considerable potential for several sectors that are likely to benefit from targeted allocations and policy reforms. Whether it’s renewable energy, infrastructure, defense, insurance, or the technology and AI sectors, various industries are poised for growth. Investors keeping an eye on these key stocks may position themselves well to capitalize on the post-budget market movements.

While these predictions are speculative, past trends suggest that strategic policy announcements may lead to significant stock price changes. As always, it's crucial to conduct thorough research and understand the broader economic context before making investment decisions.

By staying informed and prepared, investors can potentially take advantage of the potential stock market shifts as Budget 2025 unfolds.
 

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