The government raised the income tax exemption limit to ₹12 lakh from ₹7 lakh. A big relief for the middle class. More money in hand should mean more spending, right?
Markets didn’t think so. The rally was short-lived. Here’s why:
1. Valuations are already high – 66% of sectors are trading at a premium to historical averages. Even after corrections. Investors aren’t jumping in blindly.
2. Consumption boost is selective – People spend more on fashion, travel, and electronics, not essentials. That’s why FMCG stocks fizzled out while consumer durables held gains.
3. Premiumization is rising – People want better, not more. Nestlé sees a ₹7,500 crore opportunity, but mass consumption isn’t booming.
4. Credit demand is rising – NBFCs like Bajaj Finance (+9% in 5 days) and SBI Cards (+5%) are benefiting. But a broad-based rally? Not yet.
5. Earnings are weak – Nifty-50 is expected to grow EPS by just 5% in FY25. Weak earnings, weak market confidence.
The budget was a good step. But for the market, it’s wait and watch.
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