Expectations are high for a number of pro-economic policies aimed at boosting both economic activity and stimulus to those affected by the pandemic
Indian Union Budget 2021-22: With all eyes on the Union Budget 2021 today, Indian share markets might witness extreme volatility. Last week, BSE Sensex and Nifty 50 fell nearly six per cent. Sell-off by foreign portfolio investors (FPIs) and the impending Union Budget made investors jittery last week, according to analysts. FPIs remained sellers for the fourth consecutive session on Friday, pulling out $801.14 million. Finance Minister Nirmala Sitharaman, had tabled the Economic Survey 2020-21 in the Lok Sabha on Friday. GDP growth is seen expanding by 11 per cent in the 2021-22 fiscal. Now, today, on the day of the Union Budget 2021, market watchers advise a few sectors and stocks which may remain in focus today.
Sectors to watch on Budget day
Nirali Shah, Senior Research Analyst, Samco Securities
Expectations are high for a number of pro-economic policies aimed at boosting both economic activity and stimulus to those affected by the pandemic. In its quest to boost economic activity, the government might announce favourable policies in support of infrastructure development in the country. There could also be an announcement on financial support to MSMEs and smaller companies to incentivise higher lending to them.
Various labour reforms and heightened expenditure push in healthcare, real estate, railways could also be the generic theme playing out on Budget Day. Moreover, in light of the recent skirmishes with China and to improve resources for defence modernisation, there could also be an increase in budgetary allocation towards this sector. All in all, markets are expected to witness heightened volatility in the week ahead.
Ajit Mishra, VP Research, Religare Broking
All eyes are on the Budget for plans on how the government would put the economy again on the growth track while the fight with the COVID-19 pandemic is still on. The government and the RBI have taken several measures in the last year but certain areas still need support to come back to normalcy. Further, we believe the focus will be on increasing spending especially in priority sectors such as infrastructure, rural and healthcare. Additionally, importance would be given to distressed sectors such as travel & tourism, airlines, etc.
Also, emphasis will be on Make In India and digitisation, which will aid economic growth as well as support job creation. Besides, the disinvestment plan, which got delayed this year, is expected to roll out by FY22, and will support the government’s future funding. Having said that, investors have high expectations from the government. On Budget Day, sectors such as infrastructure, automobiles, agriculture & allies, FMCG and pharmaceuticals will be on the radar.
Stocks to watch on Budget day
Nirali Shah, Senior Research Analyst, Samco Securities
Larsen & Toubro (L&T), with its strong balance sheet, massive order book and effective execution capabilities, seems to be a good bet. Traders can also look at PSUs such as GAIL, NTPC, Indian Oil Corp Ltd (IOCL), as any news on the disinvestment front will prove to be favourable for these stocks. PNC Infratech, HUDCO, Dalmia Bharat are a few names which could remain in focus on 1st February.
Ajit Mishra, VP Research, Religare Broking
If the government announces measures related to infrastructure push then stocks such L&T, ABB India Ltd in capital goods, as well as stocks in cement (ACC Ltd, Ambuja Cements, Ultratech Cement, etc) and realty space (Oberoi Realty and Godrej Properties), will be in focus. There is a high expectation that the budget may provide much relief for auto companies and stocks such as Maruti Suzuki, Ashok Leyland, Bajaj Auto, Mahindra & Mahindra will benefit in that case.
Besides, any announcement concerning the rural economy, more discretionary income for consumers and allocation towards the agriculture sector will be crucial for FMCG, agriculture and allied sector, and will likely benefit stocks such as Coromandel International, Rallis India, Britannia Industries, Dabur India, Emami, Hindustan Unilever Ltd (HUL), etc. Nonetheless, any substantial increase in sin taxes will be negative for companies manufacturing cigarettes, liquor and tobacco thus stocks such as ITC, VST Industries, Godfrey Phillips India, United Spirits, etc will remain on the radar.
(The stock recommendations in this story are by the respective research and brokerage firm. The Outlooker Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)
