Analysts applauded the Budget saying it connects capital to infrastructure which has been the biggest missing link. What we now need is meticulous structuring of these initiatives and good execution, they said.
“We expect this Budget rally to extend further. However, participants should be selective in their approach now. Going ahead, global cues and corporate earnings would also be on the radar. The way the banking index moved today, we feel it could lead the next leg of the rally alongside infra counters,” said Ajit Mishra, VP – Research, Religare Broking.
Here are some of the stocks that analysts believe could gain from Union Budget 2021:
Beverages: The government has slapped an agriculture infrastructure cess of 100 per cent on alcoholic beverages, but at the same time reduced basic customs duty to 50 per cent from 150 per cent. “This is likely to lead to a status quo. Not much change as it seems more of government re-allocation between departments,” said Edelweiss Securities. That said, alcohol stocks like United Spirits and
will find favour as the government has provided a growth fillip to the overall economy.
Road & Infra: The government’s record high capital outlay of Rs 1.08 lakh crore for the road ministry is likely to provide a huge fillip to order inflows for the sector. Analysts said stocks like Dilip Buildcon, IRB Infrastructure and Ashoka Buildcon as their order books may get a boost.
Cement: Cement sector stocks like UltraTech Cement, Shree Cement, Ambuja Cements, and ACC are expected to benefit from the government’s 34.5 per cent higher outlay on capital expenditure in 2021-22. The lack of mention of recent rise in prices of cements in the finance minister’s speech also bodes well for the sector, said analysts.
NBFCs: VP Nandakumar, MD & CEO, Manappuram Finance, welcomed government’s proposal to reduce the eligible loan amount for recovery under the SARFAESI Act for NBFCs. It will help in strengthening the NBFC sector by improving credit discipline among borrowers, he said. Analysts said some of the top beneficiaries could be Bajaj Finance and other top NBFCs.
Jewellery: The reduction in import duty on gold and other precious metals from 12.5 per cent to effectively 10 per cent will make jewelry cheaper in the domestic market for buyers. Moreover, the announcement of Sebi as the regulator for gold exchanges in India, is also a welcome move as it hints at deeper regulation of digital transactions. Analysts suggest tracking jewellery makers such as Titan.
Banks: Budgeted recapitalisation of PSBs is largely in line with estimates for near-term growth, assuming banks are able to reissue bulk of the AT1s which have call option due over the next 12 months, said Karthik Srinivasan, Group Head – Financial Sector Ratings, ICRA. The proposal to divest two PSBs is expected to increase private sector participation and aid in improving credit delivery with better asset quality by providing much needed capital to public banks. According to analysts, HDFC Bank, Axis Bank, ICICI Bank, IndusInd Bank and Kotak Mahindra Bank, along with SBI and other top PSU banks, will be in focus in coming sessions.
Insurance: The government proposed to raise FDI in insurance to 74 per cent which is bound to attract enhanced flow of capital to the sector. Besides, selling one state-owned insurer will also bring efficiency. SBI Life, ICICI Pru Life, ICICI Lombard General Insurance and HDFC Life are among the top picks from the sector.
Real estate: Steps like a one-year tax holiday for affordable housing projects and an extension for an additional deduction of interest up to Rs 1.5 lakh on loan for affordable housing will benefit all stakeholders of the industry and boost investments, said analysts. Indiabulls Real Estate,
and Prestige Estates Projects are some of the top picks from the sector.