India may increase FY25 capex by 8 to 10 percent from Rs 11.11 lakh crore: Report

India may increase its FY25 capex by 8-10 per cent from the Rs 11.11 lakh crore allocated earlier, owing to higher-than-expected tax revenue and a record surplus transfer by the Reserve Bank of India (RBI), a report showed on Tuesday. The election outcome in June fuelled ongoing optimism for policies and reforms, supporting a medium to long-term positive outlook for Indian equities, according to the report by homegrown financial conglomerate Pantomath Group.

The country's stock market capitalisation also surpassed $5 trillion for the first time in the second quarter (Q2) this year in the month of May, making it the fifth country after the US, China, Japan, and Hong Kong to achieve this feat.

“Favourable market conditions, high liquidity, a conducive growth environment with stable interest rates, and benign inflation have facilitated a boom in the IPO market,” said Mahavir Lunawat, Managing Director, Pantomath Capital Advisors. The IPO market will experience a stronger pull post-budget and India is set to become the new equity funding frontier for global corporations, he added. India's primary market anticipates a bustling period ahead, with 55 companies planning to raise over Rs 68,000 crore via IPOs. Around 35 IPOs in the first half of 2025 raised around Rs 32,000 crore, with an average subscription rate of 61 times.

Sector-wise, the real estate market is set for robust growth, driven by government policies and urbanisation, requiring Rs 14 lakh crore ($170 billion) in debt financing from 2024 to 2026. Mumbai, NCR and Bengaluru are expected to benefit the most, with significant increases in construction finance and lease rental discounting (LRD), which are anticipated to increase by 40 per cent over the next three years, said the report.

In the cement sector, major big players are expanding through inorganic acquisitions, expecting 6–7 per cent compounded growth in the coming years, with top five players set to dominate over half the market by March 2025. FMCG companies have started guiding for recovery in business from rural regions. “For the first time in several quarters, they are providing positive guidance for at least the next two quarters, based on factors like a normal monsoon, robust rabi crop, bumper wheat crop and government measures, such as an increase in MSP and higher spending on MNREGA,” the report mentioned.

In the automobile sector, India may roll out the Faster Adoption & Manufacturing of Electric Vehicles (FAME) 3 scheme to encourage the sale of electric vehicles in the upcoming budget. “Electric two, three and four-wheelers are expected to be supported under the FAME scheme, which could receive a budgetary allocation of about Rs 10,000 crore,” said the report.