Union Budget 2025 Impact On Cement, BFSI, Capital Goods, Metals, Mining And More— Read IDBI Capital's Analysis

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IDBI Capital Report

With a focus on fiscal consolidation, the government has set a fiscal deficit target at 4.4% for FY26, compared to 4.8% in FY25, which was revised downward from the original target of 4.9%.

This downward trend in the fiscal deficit is a positive indication of the government's commitment to fiscal consolidation. It suggests that central governments borrowings in FY26 will remain relatively stable, which could push bond yields lower.

This creates favorable conditions for the private sector to borrow more at a reduced cost of capital, particularly at a time when private sector capex has been sluggish for various reasons. By strengthening fiscal stability, the government may also aim to improve its sovereign credit rating, potentially in FY26.

Impact on BFSI and our view:

The announcements on credit cards for micro enterprises remains positive for banks and key credit card players.

Term loans to 5 lakh entrepreneurs, as well as revision in credit guarantee for MSMEs is positive for banking industry.

Hike in FDI limit in the insurance sector will ensure deeper penetration and increased M&A activity in the sector.

Key stock impacted:

Large banks and MSME-focused mid cap banks like City Union Bank, credit card players like SBI Cards, and insurance companies.

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