Finance Minister Nirmala Sitharaman presented the Union Budget 2025 in Parliament on Saturday, February 1, announcing key policy measures across various sectors, including infrastructure, healthcare, education, and taxation. In response to the budget announcement, the Indian stock market remained open for a special trading session, operating from 9:15 AM to 3:30 PM, while commodity trading extended until 5:00 PM.
The Budget 2025 has delivered an unexpected blow to PSU and railway stocks, as the government revised its capital expenditure estimates lower than market expectations.
With the revised FY25 capex set at Rs 10.18 lakh crore and the FY26 target at Rs 11.2 lakh crore below industry hopes of Rs 11.5 lakh crore investors reacted swiftly, leading to a sharp sell-off in state-run stocks.
PSU stocks take a hit
The BSE PSU index, which tracks the performance of public sector enterprises, tumbled nearly 4% during the trading session. The BSE PSU index ended the day at 17,896.90, down by 495.03 or 2.69%.
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Among the most affected were railway-linked stocks, which saw significant declines following the budget announcement.
These are the stocks which typically get benefit from government infrastructure investments, faced the brunt of the market reaction. IRCON, RVNL, IRFC, Gujarat Gas, Mazdock among other PSU stocks hit the most, with losses ranging up to 10%.
Banking stocks
Furthermore, the banking stocks also came under pressure as reduced capex spending raises concerns about lower corporate lending demand in the near term.
The Budget 2025 also raised gross market borrowings by 5.7% to Rs 14.8 lakh crore for FY26, further impacting the banking sector.
Federal Bank, Bank of Baroda, Yes Bank, SBI, Canara Bank and HDFC ended the day on a red note after the announcement of the Budget 2025.
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