Market strategy for Budget 2025: How should investors position their portfolios?

Budget 2025: As India prepares for the Union Budget 2025, investors are bracing for potential market volatility. The budget often triggers sectoral shifts, with various industries responding differently to fiscal policies and government spending plans.

With uncertainty surrounding the budget, investors need to position their portfolios strategically. Leading financial experts provide insights on how to manage these fluctuations and capitalise on opportunities in the coming fiscal year.

Market analysts recommend diversification, reassessing portfolios, and focusing on sectors poised for long-term growth. They stress the importance of aligning strategies with anticipated fiscal policies to make the most of market shifts. By staying informed and taking a proactive approach, investors can mitigate risks and maximise opportunities during this critical period.

Budget Strategy: Opt for diversification

Analysts stressed the need for building a diversified and balanced portfolio in the face of volatility ahead of the Union Budget 2025. 

Shrikant Chouhan, Head of Equity Research, Kotak Securities, said the budget is expected to bring considerable volatility, making diversification essential for investors. Rather than concentrating investments in a few sectors, which could suffer from poor performance, Chouhan advocates for a broader portfolio spread across various sectors. 

“This diversification can cushion against potential losses and allow investors to capitalise on growth in other areas of the market,” added Chouhan.

Feroze Azeez, Deputy CEO, Anand Rathi Wealth advised investors to focus on long-term strategies even in the face of short-term budget impacts. A balanced portfolio allocation across asset classes and market caps is key. 

He suggests allocating 55% to large-cap stocks, 22% to mid-caps, and 23% to small caps. Azeez also advocated for a diversified sector approach, including areas like infrastructure, manufacturing, renewable energy, and rural development, which are likely to benefit from government initiatives. 

Sector-Specific Opportunities

With analysts recommending spreading investments to brace against volatility, here is a look at top sectors that can gain from Budget announcements.

Atul Parakh, CEO, Bigul recommends positioning portfolios with a focus on sectors expected to benefit from government policies. Infrastructure development, healthcare, pharmaceuticals, and educational technology are likely to see growth, given the anticipated increases in government spending, he said. 

Sujit Modi, CIO, Share.Market also sees scope in the infrastructure segment. Apart from this renewable energy, and electric vehicles (EVs) are expected to benefit from government spending, he said. “By focusing on fundamentally strong companies, investors can safeguard their portfolios from abrupt market swings during the budget season,” Modi added.

Instead of trying to predict the government’s priorities, investors should evaluate their portfolios post-budget and adjust for exposure to sectors like infrastructure, manufacturing, and rural development, depending on the budget’s focus, noted Akshat Garg, AVP, Choice Wealth. This disciplined approach will help investors avoid overreaction while still seizing new opportunities as they arise, he added.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.