Budget 2025 | Tax cuts and GST benefits could stimulate growth of consumer stocks: Sandeep Tandon

"If you look at Mr Modi's body language, very assertive sort of thing, which means some sort of determination is there from the government to do something and boost consumption," says Sandeep Tandon, CIO, Quant Mutual Fund.

So, what should we expect today? Markets up or down?
Sandeep Tandon: As you explained, we are getting into budget with very minimal or low expectation. And the good news is the leverage is also very low. So, the background is very easy because you do not see any sharp reaction because it is very-very light. Rather I will say if it is slightly positive also, you can expect slightly fillip there. If you look at Mr Modi's body language, very assertive sort of thing, which means some sort of determination is there from the government to do something and boost consumption.

So, I will play as a consumption theme and will talk about renewable theme, talk about larger infra which can cover a lot many things. So, I am more optimistic.


You have been watching ET Now because we have been saying the same. You have been watching ET Now that means.
Sandeep Tandon: Yes, of course.

But tell me a consumption fillip I guess is going to be via reduction in taxes. Will that be enough?
Sandeep Tandon: If they do meaningful, yes. See, one side you cut down the taxes and other thing you can get benefit of GST if the consumption moves up.

So, it they want, really they want to demonstrate something, the opportunity is there. And I think we need that support at this point of time. If you really look at a lot of people take pro-consumer or pro-socialist budget sort of thing consider negative, in this context it will consider positive.

So, what will it take for the bears to get scared? Right now, the bulls are feeling scared.
Sandeep Tandon: The way I will put in the market, I will look at more from a risk appetite data that will give you a fairly good perspective because risk appetite has a direct correlation with the mid and smallcap. Risk appetite which has started declining from July 2024 and it gathered momentum from September, October.

Now, if you really look at, we have already covered in terms of the cycle which we look at or in terms of the ranges which I look at, it has already covered 60% of the journey. What is left now is around 40%, which means if I have to extrapolate, that means maybe by March end or beginning April sort of thing, the cycle of risk off should peak out and which means a great buying opportunity can emerge.

But that does not mean that everything looks bad right now. I think if we look at the individual stocks rather than sector, I think multiple stocks have bottomed out. Their risk appetite cycle has already bottomed out. I think look at the opportunity. So, I think it is a stock specific year and rather than looking at the sector also looking at the broader themes, it will be a very stock specific opportunity and that is the way maybe 2025 would be.

Actually, it is turning out to be a very-very decent start. It is turning out to be a decent start. So, Monday morning when markets will open, once today's budget reaction is over, will budget be a forgotten story? Will it be back to Donald Trump, tariffs, China, Korea, everything or this budget could have a prolonged impact? Like 2021 when the budget came, it had a prolonged impact for an extended period of time. It kick-started the expenditure cycle. Could this budget kick-start that for consumption stocks that is what I am trying to understand.
Sandeep Tandon: Maybe. If it is something really drastic comes from the government side and they are able to demonstrate that they are committed to revive the economy, then I think it can last longer. But if there is a disappointment, like Sandip was also mentioning, if that is the case, then it could be just one day event and then you go back to the normalcy, to the global markets and the corporate developments.

But the global market construct, the kind of FIIs selling that we are seeing right now, you think that is going to take away from whatever 2025 could bring on the table for us?
Sandeep Tandon: So, let me answer this question in a different manner. Again, linking with FIIs, the current context, if I look at, my vulnerability is less in India and the way we look at the global market, vulnerability is more in the US. We believe a good amount of competency is there in the US market and hence vulnerability is high, which means, for whatever reason, if the US market corrects a lot, let us say correct 15-20% sort of thing, which I am not ruling out, then money can also shift back to India.

And again, if I look at the pure FII data, I think some sort of selling exhaustion is visible now. Now, it is very difficult to pinpoint what will happen in the next two days or two weeks, but we are reaching that stage where selling exhaustion signs are visible and hence, I think there will be a slowdown in the selling whatever we have seen so far in the last many months.