“Many of the key themes this Budget will revolve around Covid-19, either directly on health issues (vaccines), or regulatory support to sectors most affected (e.g., hospitality, retail, aviation). In addition, infrastructure, agriculture, social sectors, promotion of domestic manufacturing and incentives to boost construction and housing are likely to be the focus,” said Sonal Verma, Economist at Nomura.
Here is a list of stocks that analysts at Axis Capital and Karvy Broking have put on their watchlist for possible Budget impact:
Auto: The automotive industry expects details regarding setting up of vehicle scrappage infrastructure and clarity on Product-linked incentive (PLI) scheme. Apart from that increased spending on infra and rural sector will also boost the fortunes of automakers.
Stocks in Focus: Hero MotoCorp, Bajaj Auto, TVS Motor, Maruti Suzuki, Ashok Leyland, Tata Motors, Escorts, Mahindra and Mahindra, CEAT, Apollo Tyres, Amara Raja Batteries, Exide, VST Tillers and Tractors.
Consumer Durables: The industry is expecting extension of PLI scheme, lower GST in discretionary products and increase in tax slams that will lead to more disposable income. Focus on electric vehicles is also ex[ected.
Stocks in Focus: Polycab India, Sheela Foam, Amber Enterprises and Dixon Technologies
FMCG & Retail: Increased investment in agri-infrastructure such as cold chain, warehousing, logistics, sustained rise in allocation to agriculture sector, doubling the tax saving limit for investments and increase in excise duty, levy of COVID cess or raising NCCD duty on cigarettes and tobacco are some of the key expectations.
Stocks in Focus: Dabur, HUL, Britannia, Asian Paints, Jyothy Labs, Emami, Nestle, Marico, Godrej Consumer Products, V-Mart Retail may benefit but ITC, Godfrey Phillip and VST Industries may turn out to be losers.
Chemicals: Pesticides Manufacturers and Formulators Association of India (PMFAI) expects GST reduction. Apart from that inclusion of the chemical sector under the PLI scheme and changes in Custom Duty structure for bulk chemicals are some of the other demands.
Stocks in Focus: PI Industries, Dhanuka Agritech and all companies in the Specialty Chemicals sector.
Cement: Urban infrastructure and Real Estate to get more funds for development. Meanwhile, Pradhan Manti Gram Sadak Yojna, Pradhan Mantri Awas Yojna (Rural) and MNREGA are also expected to get more funds for development.
Stocks in Focus: Dalmia Bharat, JK Cement, Birla Corp and Star Cement.
BFSI: The industry has a long expectation list that includes recapitalisation of PSU banks, a new bad bank to deal with accumulated stress and privatisation of some private banks. Housing finance firms expect an extension of the CLSS scheme under PMAY. Other demands include r tax incentives to enable people to buy adequate health insurance and increasing the quantum and timeline of the ECLGS scheme, which is the part of broader Atmanirbhar Bharat push.
Stocks in Focus: SBI, Canara Bank, Bank of Baroda, Punjab National Bank, HDFC Bank, Axis Bank, ICICI Bank, Indusind Bank and Kotak Bank, SBI Life, ICICI Pru Life, ICICI Lombard General Insurance and HDFC Life.
Infra: Majority of India Inc expects the Union budget in 2021-22 to focus on boosting infrastructure while offering simpler tax systems to make doing business easier. Capital expenditures for 2021-22 are projected to be Rs. 5 lakh crore, compared to Rs. 4.1 lakh crore.
Stocks in Focus: L&T, Adani Ports, GMR Infrastructure, IRB Infrastructure Developers, Nagarjuna Construction Company, Hindustan Construction Company, GVK Power and Infrastructure, IRCON and RITES.
Healthcare: Deduction under Sec 80D for mediclaim currently stands at Rs 25000. Further increase given the current requirements will enable hospitals to improve on its healthcare facilities to cater to the increasing demand.
Stocks in Focus: Apollo Hospitals, Fortis Healthcare, Narayan Hrudayalaya, IPCA Labs and LalpathLabs.
Power: The renewable energy segment requires a significant boost to state governments to encourage investment in the solar top segment. Under the Atma Nirbhar Bharat Plan, domestic production of solar cells and modules must be encouraged, the industry says.
Stock in Focus: Adani Green Energy, SJVN, JSW Energy, Torrent Power, Adani Power, Tata Power Company, NTPC, Power Grid Corporation of India and Adani Transmission.
IT: Dalal Street analysts are expecting exemption in the dividend distribution tax, which may benefit Indian IT companies that pay healthy dividends. Exemptions in the tax will encourage the overall IT sector.
Stocks in Focus: TCS, Infosys, HCL tech, Tech Mahindra and other IT services companies.
Telecom: We can see traction in the spectrum of bandwidth which will impact some capacity expansion of some telecom and better services.
Stocks in Focus: Bharti Airtel, Reliance Industries, Vodafone Idea.