The Union Budget, which is the most extensive account of the Central government’s finances, will be presented by Finance Minister Nirmala Sitharaman today at 11 am. A day ahead of the Union Budget presentation, Bulls roared on the D-street, as investors eyed pro-reforms, pro-growth measures from the annual document. Vinod Nair, head of research at Geojit Financial Services, said: “Taking positive cues from global markets and favorable takeaways from the Economic Survey report, the market rallied ahead of the Budget day with all major sectors in the green. Global markets turned positive backed by gains in the US market as investors ignored geopolitical disturbances and turned their eye towards strong earnings numbers from tech firms”
At close, the Sensex was up 813.94 points or 1.42 per cent at 58,014.17, and the Nifty was up 237.80 points or 1.39 per cent at 17,339.80. Neeraj Chadawar, head – quantitative equity research, Axis Securities, said: “Ahead of the Union Budget, equity indices bounced back on Monday after a volatile session witnessed on Friday. The advent of new Covid variants and the associated uncertainties has kept the markets and the economies globally on edge. We believe the Union Budget could bring about some confidence and stability in current volatile markets.”
Here are the top sector and stock picks:
PLI Schemes
The government’s focus on PLI schemes in the budget will support local manufacturing of Electric & Electronics, Semiconductors & Embedded Systems, Battery Engineering, and Textiles, Nair said. Stocks associated with this scheme are Dixon, Amara raja batteries, Minda Industries, Tata Chemicals, Siemens, Page Industries.
Capital expenditure
“We expect the government to increase the Road infrastructure spending from the current Rs 1.18 lakh crore and award National Highways extensions. Green energy will also be a key theme of the budget,” he added. The stocks to be watched are, L&T, KNR Construction, The Ramco Cement, Ashok Leyland, Tata Power.
Consumption
“An increase in disposable income in the hands of people both rural and urban and free housing will result in more demand for consumption and FMCG stocks,” Nair explained The top picks are HUL, Nestle, Dabur, Hero Motor
Housing and Healthcare
The government will push affordable housing including tax benefits. Allocation in public health care through hospitals and clinical services will provide benefits to the common man. However, no real benefit is expected for the private & pharma sector unless infrastructure or additional tax benefits is offered. We expect the following stocks to benefit based on the development. They are HDFC Ltd, Can Fin homes, Dr. Lal Path labs, Narayana Hridyalaya
Hospitality
“Government can provide infrastructure status or other benefits to the hospitality industry being heavily impacted by pandemic,” he added. Some key stocks are Indian Hotels, Easymytrip, Thomas Cook.
Infrastructure
A gauge of India’s top-30 companies in roads, air, ports, shipping, railways and other utility services, climbed 36% in 2021, its best gain since 2009, as the government continues to fire up the public spending to create jobs and boost growth. ICICI Direct expects the allocation to remain ‘buoyant’ with higher spending on roads, defence, water, housing and railways.
Top picks include Polycab India, HG Infra Engineering, KNR Constructions, PNC Infratech, Larsen & Toubro, Thermax, KEI Industries, ABB India, Siemens India, Ramco Cements, UltraTech Cement, ACC, Ambuja, Bharat Dynamics, Bharat Electronics, NTPC, Container Corporation of India.
Rural/Agriculture
Sell-side analysts expect continued support for farming and rural areas through more aid for food processing, incentives linked to production as well as higher farm credits, and subsidies for fertilizers and crop protection. Increased agricultural industry spending will benefit consumer goods companies struggling with higher input costs.
“Given the backdrop of rising Covid cases, we think that policy makers will need to strike a balance between boosting rural demand and investing in infrastructure while continuing on the path of fiscal consolidation to maintain macro stability,” Goldman Sachs Securities Pvt. analysts led by Santanu Sengupta wrote in a note. Top stocks include PI Industries, Dhanuka Agritech, Rallis, Godrej Agrovet, Hindustan Unilever, Britannia, Dabur and Nestle India
Health Care/Pharma
In continuation of its focus on bolstering healthcare infrastructure, the government is expected to increase spending on companies to boost production, as well as tax relief for individuals buying health insurance, better access to medical care and a generous push for drug research.
Top picks include Apollo Hospitals, Narayana Healthcare, Shalby Ltd., Gland Pharma, Krishna Institute of Medical Sciences, Healthcare Global Enterprise, Max Health, HDFC Life, SBI Life and most drug makers.
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