Expert view: STT cut improbable in Budget due to revenue considerations, says Axis Securities CEO | Stock Market News

Expert view: Pranav Haridasan, Managing Director & CEO of Axis Securities, believes a cut in the securities transaction tax (STT) is improbable due to revenue considerations. In an interview with Mint, Haridasan said the Budget 2025 may take a pragmatic stance of pushing growth while staying fiscally responsible. He also shared his views on the Indian stock market and the US Fed interest rate cycle.

Edited excerpts:

What are your expectations from Budget 2025?

Budget 2025 is expected to take a pragmatic stance — pushing growth while staying fiscally responsible.

The fiscal deficit will likely remain within the government’s projected target, ensuring capital spending continues, albeit cautiously.

A significant focus will be on infrastructure, with efforts to reduce logistics costs by 4-6 per cent of GDP through investments in roads, railways, and logistics hubs.

However, a free flow of capital expenditure seems unlikely, given the need to maintain fiscal discipline.

On taxation, while the market anticipates rationalising capital gains tax to simplify compliance, a cut in the securities transaction tax (STT) is improbable due to revenue considerations. Instead, relief for individual taxpayers via higher 80C limits and tweaks in the new tax regime could drive consumption.

The production-linked incentive (PLI) scheme is set to expand, strengthen domestic manufacturing, and attract global investments. The depreciating rupee poses challenges, making imports costlier, but it also presents an opportunity to enhance export competitiveness.

With global uncertainties, including potential shifts in US policies, India has the chance to position itself as a strategic global player. Expect a budget that balances fiscal prudence with an innovation-driven growth agenda.

Do you expect the railways and defence sectors to see fresh traction after the Budget?

The focus on railways and defence will now shift from budget allocations to execution.

While valuations in these sectors are no longer as attractive, additional funding would be a positive catalyst, especially given the slow capex execution seen last year.

We anticipate a 10-15 per cent increase in FY26 capex compared to FY25 revised estimates, with the government prioritising large-scale infrastructure projects to sustain long-term growth momentum.

How do you see the growth-inflation dynamics? Should we be cautious about growth slowing down?

The first half of FY25 was challenging due to lower government spending, tighter credit conditions, weak urban demand, and rising inflation —factors that impacted corporate earnings.

However, fiscal support, a rebound in private capex, and easing credit conditions — possibly through a CRR cut — are expected to aid recovery in FY26.

While caution is warranted, growth prospects for the next fiscal year appear stronger, with improving fundamentals across key sectors.

What is your take on the ongoing Q3 earnings?

Q3FY25 earnings reflect mixed trends. Positive factors include festive demand, increased government spending, and rural consumption recovery, while urban demand remains sluggish.

Early signs of recovery are visible in high-frequency indicators, but broader consumption trends may take time to stabilize.

Sectors such as BFSI, IT, healthcare, telecom, and hotels are showing resilience, while cyclical sectors like metals and mining continue to face headwinds.

How do you see the US Fed interest rate cycle this year, especially after Donald Trump’s arrival?

While the Fed indicated potential rate cuts in 2025, recent macroeconomic data —such as stronger-than-expected job growth and rising inflation — suggests that a prolonged pause might be on the cards.

Economic data will dictate the trajectory, and with Trump’s policies likely to impact trade and inflation, the Fed may adopt a wait-and-watch approach rather than rushing into rate cuts.

What should be our investment strategy for the medium term?

2024 saw front-loaded market gains, but 2025 could be different, with higher volatility in the first half and stronger performance in the latter half. 

Corporate earnings growth will be the key driver of returns, making a stock-specific approach critical. Focusing on ‘growth at a reasonable price’ and ‘quality’ will be essential.

Key investment themes for 2025:

• Premium consumption as a structural play.

• Indian healthcare’s growth potential.

• Infrastructure value chain expansion.

• Pharma and telecom as defensive bets.

• Real estate growth supported by strong demand.

• BFSI offers attractive valuation entry points.

What key risks should investors not overlook at this juncture?

Key risks include inflationary pressures, slowing earnings growth, and macroeconomic challenges like rupee depreciation, trade tensions, and rising bond yields. 

Investors should remain vigilant and diversify across resilient sectors while maintaining a cautious approach in cyclical plays.

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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.