The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman on Saturday, February 1, continued the government’s focus on gradual consolidation while providing a boost to consumption, Kotak Institutional Equities said in a note on Sunday, February 2.

The government has also made changes to the tax slabs under the new regime, letting go of ₹1 lakh crore tax revenue due to these changes. Kotak believes that the impact on consumption would be “quite nuanced”, unlike the stock market reaction on Budget day.

Domestic bond yields are likely to remain soft in financial year 2026, the brokerage wrote, led by soft domestic and global inflation, a broadly favourable demand-supply dynamics for domestic SLR securities and a gradual loosening of the monetary conditions by major central banks depending on volatility in the external sector.

Kotak Institutional Equities expects the 10-year benchmark bond yields to be in the 6.3% to 6.8% range in financial year 2026.

Similar to other street participants, Kotak too is doubtful about the 14% year-on-year increase in income tax collections, in light with the proposed changes made to the tax slabs.

Here is what Kotak Institutional Equities wrote about the implications of the Budget announcements on various sectors and stocks:

• The revision of tax slabs can boost demand for two-wheelers and entry-level passenger vehicles from financial year 2026.
• Capex outlay for PMAY was significantly lower in the financial year 2025 revised estimates and was similar to the budget estimates for financial year 2026. This was negative for cement companies, given that rural housing accounts for 35% of the total cement demand. Urban housing accounts for 30% of the total cement demand.
• The five-year mission to improve productivity and sustainability of cotton farming is a minor positive for Page Industries as this can help more domestic sourcing.
• The national mission on Hybrid seeds created with a small outlay is positive for seed companies like Kaveri Seeds, Rallis India and Bayer Crop.
• The announcement to develop more than 100 GW of nuclear energy by 2047 will benefit stocks like L&T, BHEL and HCC.
• No cut in excise duty on CNG compared to expectations of a cut will be negative for IGL and MGL along with GAIL and Petronet LNG.
• Increase in allocation to PM Surya Ghar Muft Bijli Yojana is positive for players like Premier Energies which part on DCR module and cell market.