FMCG, consumer durables lead market rally post-Budget 2025 

Markets reaction to the Union Budget 2025-26 was lukewarm, though sectors like auto, FMCG, and consumer durables rallied significantly following major income tax relief announcements for the salaried class. The tax exemption up to Rs 12 lakh per annum under the new regime is expected to boost consumption across these sectors.

The benchmark indices closed marginally lower in a volatile trading session on Saturday. The BSE Sensex ended at 77,505.96, while the Nifty 50 settled at 23,482.15. The market displayed significant volatility during the budget session, with consumption-driven sectors gaining momentum while infrastructure and energy stocks faced selling pressure.

Among the top gainers on the National Stock Exchange, Maruti Suzuki led with a 6.05 per cent surge, followed by Trent (5.82 per cent), ITC (3.75 per cent), Britannia (3.42 per cent), and Eicher Motors (2.90 per cent). The major losers included Larsen & Toubro and Bharat Electronics Limited, both declining 3.59 per cent, followed by Coal India (-2.65 per cent), ONGC (-2.34 per cent), and Power Grid (-2.15 per cent).

Sector-wise performance showed strength in consumption-related sectors, with Nifty Auto gaining 1.91 per cent, FMCG up 3.01 per cent, Media rising 2.21 per cent, Realty advancing 3.38 per cent, and Consumer Durables climbing 2.96 per cent. The consumer durables sector’s rally was particularly noteworthy given the budget’s focus on domestic manufacturing through import duty adjustments. The banking sector remained under pressure, with Nifty Bank closing at 49,506.95, down 0.16 per cent.

“The market has responded to the Union budget with a mixed view, primarily due to the modest 10 per cent YoY increase in capex for FY26, falling short of expectations,” said Vinod Nair, Head of Research at Geojit Financial Services. He added that sectors like railways, defense, and infrastructure were affected, while consumption-based sectors showed positive momentum.

In the broader market, the Nifty Next 50 index gained 0.60 per cent to close at 63,503.10, while the Nifty Midcap Select index declined 0.56 per cent to 11,864.60. Overall market breadth remained positive, with 2,081 stocks advancing and 1,829 declining on the BSE. Sixty-two stocks hit their 52-week highs, while 72 touched their 52-week lows. Nine stocks hit the upper circuit, and six hit the lower circuit.

“While the Budget failed to cheer the markets, sectoral stocks from consumer durables, FMCG, and automobile space attracted significant buying interest after the government announced major income tax relief for the salaried class,” noted Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd. He added that investors should watch out for global developments, as any uptick in US bond yields and FII selling could dampen sentiment.

The technical outlook remains cautiously optimistic. Shrikant Chouhan, Head of Equity Research at Kotak Securities, pointed out that “the short-term market texture is bullish, but due to temporary overbought conditions, we could see range-bound action in the near future.” He identified 23,270/77,000 and 23,100/76,500 as key support zones, while 23,810/78,500 and 23,900/78,800 could act as resistance areas.

The India VIX, which measures market volatility, decreased by 13.24 per cent to 14.10, suggesting reduced market nervousness. According to Ajit Mishra, SVP Research at Religare Broking Ltd, “The impact of the Union Budget could linger in the next session, particularly in the consumption sectors.”

Satish Chandra Aluri from Lemonn Markets Desk highlighted that the government will forego approximately Rs 1 lakh crore due to tax relief measures, which is expected to directly benefit domestic consumption. However, to maintain fiscal balance and achieve the targeted fiscal deficit of 4.4 per cent of GDP for FY26, the government has opted for a modest increase in capital expenditure.

Looking ahead, market participants are focusing on the upcoming RBI monetary policy meeting and ongoing quarterly earnings season for further direction. Technical analyst Nagaraj Shetti from HDFC Securities noted that “having surpassed the hurdle of 23,500 levels, bulls could advance towards another resistance of 23,800 levels in a short period of time,” with immediate support at 23,400 levels.