The biggest day of the fiscal year has arrived. While the fanfare around the budget this year has been reduced due to the global stock market crash prompted by the US Federal Reserve’s strong tilt toward combating inflation, the event is nevertheless important for domestic investors.
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Seasoned traders look forward to this day because of the enormous volatility in the market caused by the finance minister’s speech as it digests the details of the budget.
Analysts’ top selections include infrastructure, rural development, and healthcare stocks as India’s government prepare to increase expenditure in a budget aimed at jumpstarting investment to boost growth.
Construction spending, including on-road and port infrastructure, as well as incentives for electric mobility and renewable energy, are likely to be highlighted in Finance Minister Nirmala Sitharaman’s budget speech on Tuesday, as policymakers seek ways to help the economy recover from the pandemic.
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- Here are some of the top sector and stock choices from leading brokers:
Infrastructure
A measure of India’s top-30 companies in roads, aviation, ports, shipping, railways and other utility services rose 36% in 2021, the highest rise since 2009, as the government increased public investment to generate employment and improve economic output. According to ICICI Direct, the allocation would remain “buoyant,” with increased expenditure on roads, defence, water, housing and railways.
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 and Container Corporation of India are among the top picks.
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Renewable Energy/EV
Analysts anticipate a slew of incentives for infrastructure development for electric vehicles and green energy generation, in keeping with the government’s emphasis on lowering emissions and dependence on fossil fuels. “Thrust is expected on sustainable technologies with certain benefits aimed at accelerating the adoption of EVs in India. Moreover, the EV charging infrastructure segment is expected to receive a boost to support EV adoption,” according to Chadawar of Axis Securities.
Maruti Suzuki India, Tata Power, Adani Green, Hero Motocorp, Bajaj Auto, TVS Motors, Mahindra & Mahindra, Tata Motors, Minda Corporation, Gabriel India and Dixon Technologies are among the top picks.
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Rural/Agriculture
Sell-side analysts anticipate continuing assistance for agriculture and the rural economy through increased food processing aid, production incentives, greater farm credits, and fertilizer and crop protection subsidies. Increased agriculture expenditure will aid consumer goods companies dealing with rising input costs. “Given the backdrop of rising Covid cases, we think that policymakers 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 (India) Securities Pvt. analysts led by Santanu Sengupta wrote in a note.
PI Industries, Dhanuka Agritech, Rallis, Godrej Agrovet, Hindustan Unilever, Britannia, Dabur and Nestle India are among the top picks.
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Healthcare/Pharma
In order to continue its focus on boosting healthcare infrastructure, the government is likely to raise spending on corporations to enhance output, as well as provide tax relief for individuals purchasing health insurance, improved access to medical treatment and a generous push for drug development.
Apollo Hospitals, Narayana Healthcare, Shalby Ltd., Gland Pharma, Krishna Institute of Medical Sciences, Healthcare Global Enterprise, Max Health, HDFC Life, SBI Life, and most pharma manufacturers are among the top picks.
