Budget 2025 expectations: New tax regime could be made more attractive, says Maxiom Wealth founder | Stock Market News

Budget 2025 expectations: Ram Medury, founder and CEO of Maxiom Wealth, believes Finance Minister may announce some income tax concessions in her Budget 2025 speech with an aim to spur consumption. The government may increase spending on capital expenditure (capex), with allocation to infrastructure. In an interview with Mint, Medury shared his views on markets, Q3 earnings and also on IPO trends this year.

Edited excerpts:

What could be the key focus areas in Budget 2025?

In our opinion, a key focus area in Budget 2025 would be to continue the growth momentum, which seemingly slowed in Q2.

With no major assembly elections (except Delhi), there is less pressure to take populist measures.

We expect the Finance Minister (FM) to continue increasing spending on capex, with allocation to infrastructure, particularly rural infrastructure, to be further increased.

Agriculture, healthcare and defence are likely to be other areas of emphasis.

Some income tax concessions are likely to be made to spur consumption.

A few announcements to incentivise investments by the private sector are also expected.

Gold imports could be discouraged. Rather than small tweaks, the FM is likely to speak about the big picture, which we feel would be focused on growth.

How could tweaks in income tax rates and slabs influence the Indian stock market?

Any tweak that reduces tax payment and thus leaves more money in the hands of people is likely to boost consumption, which should push up the growth numbers.

The old tax regime incentivised savings and investment, whereas the new tax regime does not put such conditions, and even offers a slightly lower tax rate, which means people are free to use it whichever way they wish. This results in more spending that can spur growth.

Direct tax collections, both personal and corporate, have shown a good increase during the year.

GST collections are also up. This will give FM space to pass on some relief to the middle class.

We do expect the new tax regime, which is more consumption-friendly than the old regime, which is investment-focused, to be made more attractive.

The old tax regime is likely to be done away with, if not this year, in the years to come.

We do not expect capital gains taxation to be changed, except for some marginal increase in STT.

However, we do expect some measures to increase tax revenue, either by way of an increase in CESS, or a higher surcharge for the uber rich.

Luxuries such as travel outside the country might be targeted to increase tax revenues.

We are unlikely to see major relief in indirect taxation. In other words, GST rates are not coming down in a hurry.

What is your take on the Q3 earnings? Should we brace for the trends of the past two quarters?

We did not buy into the theory that the growth slowdown in Q2 was a blip and that Q3 will more than compensate for it.

We expect consumption to moderate at the top end of the domestic consumption ladder, which is why Q3 numbers are unlikely to be superlative.

That is why we expect Budget 2025 to take timely corrective action to spur growth and prevent momentum loss.

Q3 numbers will likely be better than Q2 but unlikely to set the stage on fire.

We must brace for subdued numbers vis-a-vis expectations built over the last two to three months.

Do you think Donald Trump’s policies could be major headwinds for the Indian stock market?

Donald Trump’s Presidency will be highly unpredictable. His vision of making America great again, which indicates more protectionist measures, can make life difficult for the USA’s trading partners, such as China and India. Still, it will also impact the US economy.

Our view is that many of the things Trump is proposing are unlikely to be implemented, as the USA is not in a position to dictate terms to the rest of the world.

For example, Trump’s tariff tantrum, if implemented, could result in inflation shooting up in the US, especially in the healthcare sector.

Similarly, a large cut in government spending can adversely impact growth. Cutting defence expenditure can reduce America’s influence and alter geopolitical equations.

Regarding Indian stock markets, Trump’s unpredictability will add to our market’s volatility.

The policies that make investments in the US attractive can result in more dollars getting pulled out of India.

However, there are many offshore funds in the US whose mandate is to invest outside of the US.

These funds will continue to see India as the most attractive market offering growth. So, this money will find its way to India.

Similarly, Trump going full throttle on oil might keep oil prices in check, which will benefit India.

At the risk of sounding silly, we do not expect POTUS to implement everything he has been discussing. There are likely to be policy U-turns.

The onus is on India to influence US policy in favour of India, and we believe we have a good team for that.

India will also seek to become increasingly self-reliant. We are also unlikely to cave to the pressure of tariff increases and give up our de-dollarisation efforts.

So, all that can be said with certainty is that market volatility will increase.

We remain long-term bullish on the India story, and that is unlikely to change with Trump.

We saw a flood of IPOs in 2024. What should we expect this year?

IPOs should be considered opportunities for investors whose money is locked in to get an exit at a decent price as a reward for taking risks on an idea. 

The price at which the market absorbs an IPO is a function of prevailing sentiment as well as the story that is built around it by the Investment Bankers.

With valuations cooling down, investors looking for an exit may not get hefty premiums. This will surely slow down the number of IPOs hitting the market. 

However, there will always be companies that are looking to execute their capital-raising plans.

They might factor in lower valuations and want to tap the Indian investors who are still looking to make listing gains.

So, we can still expect IPOs to keep hitting the market. The quality of these IPOs is likely to be better, and valuations will be more attractive. 

Investors should actually look at such IPOs from a long-term investment opportunity and not just listing gains. 

But we are unlikely to see the flooding that we witnessed in 2024.

Where do you see opportunities in this market?

We still feel the ‘India story’ is intact and that the Indian market will continue to offer attractive investment opportunities for the long-term investor. 

We are more focused on our roots and wings investment philosophy, which is more bottoms-up than top-down, and hence, do not wish to list sectors or industries for growth. 

We expect companies blessed with visionary management focused on growth and using technology for the same to be great investment ideas, particularly if the stock prices have been handsomely beaten down.

We expect a positive investment environment, and we will bet on companies geared to generate greater mileage from the supportive ecosystem. These companies are likely to come from different sectors.

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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.