Stocks - Budget 2021

These stocks may be in focus ahead of Budget 2021

 

"Many of the key themes in the Budget will revolve around COVID-19, either directly on health issues (vaccines) or regulatory support to most affected sectors (such as hospitality, retail, aviation etc.). In addition, infrastructure, agriculture, the social sector and promotion of domestic manufacturing, alongside incentives to boost construction and housing, are likely to be in focus," says Sonal Verma, economist at Nomura.

 

The automotive industry expects details regarding setting up of vehicle scrappage infrastructure and clarity on the product-linked incentive (PLI) scheme. Apart from that, increased spending on the infra and rural sectors will also boost the fortunes of automakers. Stocks to watch: Hero Motocorp, Bajaj Auto, Escorts, Maruti Suzuki, Ashok Leyland, SSWL, Endurance Tech and Minda Industries.

 

Consumer durables

The industry is expecting an extension of the PLI scheme, lower GST on discretionary products and an increase in tax slams that will lead to more disposable income. Stocks in focus: Polycab India, Sheela Foam, Amber Enterprises and Dixon Technologies.

 

 

Increased investment in agri-infrastructure such as cold chain, warehousing and logistics, and a sustained rise in allocation to the agriculture sector, doubling of the tax-saving limit for investments and an increase in excise duty, levy of a COVID cess or a rise in the 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 and Godrej Consumer Products may benefit, but ITC, Godfrey Phillip and VST Industries may be affected.

 

The Pesticides Manufacturers and Formulators Association of India (PMFAI) expects a reduction in GST rates. Apart from that, inclusion of the chemical sector under the PLI scheme and changes in the custom duty structure for bulk chemicals are some of the other demands. Stocks in focus: PI Industries and Dhanuka Agritech, and all companies in the specialty chemicals sector.

 

Urban infrastructure and real estate are expected to get more funds for development. Meanwhile, the Pradhan Manti Gram Sadak, the Pradhan Mantri Awas (Rural) and MNREGA schemes are also expected to get more funds for development. Stocks in focus: Dalmia Bharat, JK Cement, Birla Corp and Star Cement.

 

The industry has a long expectation list including recapitalisation of PSU banks, a new bad bank to deal with the accumulated stress, and privatisation of some banks. Housing finance firms expect an extension of the CLSS scheme under PMAY. Other demands include tax incentives to enable people to buy adequate health insurance and an increase in the quantum and the timeline of the ECLGS scheme, which is part of the government's broader Atmanirbhar Bharat drive. Stocks in focus: All PSU banks, private banks, insurance and housing finance companies.

 

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.

Traction can be expected in the spectrum of bandwidth which will impact the capacity expansion of some telecom and improve services. Stocks in focus: Bharti Airtel, Reliance Industries and Vodafone Idea.