The Interim Budget for FY20 is likely to forecast a fiscal deficit of 3.3 percent of GDP whilst the actual fiscal deficit is likely to be 3.5 percent of GDP for FY20, suggest experts
The big event, Interim Budget 2019, is around the corner and if you are thinking about stocks and investment ideas then you are not alone. This is the big question for investors who are looking to invest in stocks that are likely to benefit the most from the Interim Budget.
The Union Budget 2019-20 will be presented on February 1, 2019. It is going to be an Interim Budget as it will be followed by another Budget by the new government later in the year.
The Interim Budget for FY20 is likely to forecast a fiscal deficit of 3.3 percent of GDP whilst the actual fiscal deficit is likely to be 3.5 percent of GDP for FY20, suggest experts.
“The government finances for FY19 appear stretched. We expect the fiscal deficit as a percentage of GDP to see a marginal slip of 20bps in FY19. What would be interesting to watch is whether the government promises fiscal consolidation in FY20 or it focuses on more expenditure,” Sahil Kapoor, Chief Market Strategist, Research, Edelweiss Wealth Management told Moneycontrol.
“Tax relief for individuals could be of high interest for retail investors. We do not expect any major announcement focused on capital markets. Fiscal deficit numbers and governments estimates of capital expenditure would be keenly watched,” he said.
Most analysts are expecting a full Budget this time, and ahead of elections, government could announce some sort of farm loan waiver, rural stimulus and ensuring a rise in minimum support price (MSP).“Announcement of sops for farmers, SMEs, women and income tax payers are likely to be the key features of the budget speech. Whilst these will be announced with much fanfare, the hidden features of the Budget are likely to include the absence of above-the-line allocations for banks’
recapitalization and the coming withdrawal of government support to the economy in FY20 vs FY19,” Ambit Capital said in a report.
Sharekhan bets on Bata India, Britannia Industries, Century Plyboards, Dabur India, Escorts, Future Lifestyle Fashions, GNA Axles, Hindustan Unilever, ICICI Bank, and V-Guard Industries ahead of Interim Budget.
We spoke to different experts and they have given us these stocks that are likely to benefit the most from the Interim Budget 2019:
Analyst: Dinesh Rohira, CEO, 5nance.com
With the expectations of a rise in universal basic income (UBI) for a rural farmer in the Interim Budget and past hike in MSP, the company stands to benefit in a long term.
It reported a good set of monthly sales. With stable Q3FY19 earnings and about 15 percent YoY rise in net profit, it is a value buy.
The rural segment accounts for about 45 percent of overall revenue contribution for Dabur India which offers an attractive opportunity for the company to leverage on account of the rural-focused budget. Further, a stable input cost and revival in demand will likely boost its margin going forward.
The company stands to benefit from the rural theme as it continues to report a consistent rise in monthly sales. The tractor segment has grown at 28 percent YoY in December. Further, product innovation is expected to add volume in the coming few quarters.
As the government is inclined toward upgrading rural infrastructure, an ancillary for infrastructure stands to benefit in the long term. It reported a double-digit rise in net profit (24 percent) in Q3FY19.
India accounts for about 13 percent of its consolidated revenues and contributes about 26 percent operating profit. With the revival in domestic demand for vehicles and steps taken to diversify its business, it is expected to deliver a robust performance in the next few quarters.
Analyst: Sumeet Bagadia, Executive Director at Choice Broking
Apollo's leadership in the domestic market, ease in raw material costs and potential upside from operations in larger European market makes it a preferred play with sustained growth outlook.
We drive comfort from building business size, strong income growth, low stressed book, and adequate capitalization level. Thus, we believe that the latest correction in stock price is an attractive entry point for investors.
Business looks attractive given strong expected growth backed by a capacity ramp-up in Lithuania unit and robust order book, growing business of Bill Forge and improving operational efficiency.
Grasim's business is likely to get a boost from stagnant cotton production which is positive for VSF demand, capacity expansion, and strong domestic realization. Grasim has also a presence in the domestic cement sector through its subsidiary Ultratech Cement which is the largest player with a capacity of around 93 million tonnes.
Adani Ports and SEZ Ltd (APSEZ), promoted by Adani Group is India's largest private ports developer and operator. The company has pan India presence in 10 locations with flagship Mundra Port in the Gulf of Kutch.
Considering its diversified presence across the Indian coastlines and high probability of strong growth in the future, we recommend to buy the stock.
Analyst: Debadrata Bhattacharjee, Head of Research, CapitalAim
UPL is a very focused stock ahead of Union Budget. Government’s focus on farmers pushed UPL to a new high. If the government gives a special package to fertilizer companies, this stock can perform well.
The stock is trading in a range of Rs 790 on the upper side and Rs 730 on the lower sideline. RSI and MACD momentum indicate UPL price will stick to the upper band. Rs 805 is the likely target in this counter.
If government spending increases in infrastructure projects, then cement is one likely sector which gives positive returns ahead of Union Budget. ACC is the counter where one can bet on. Accumulate ACC from Rs 1,400 to 1,420, as one can easily see Rs 1,495 in the near term.
Cement is the core of every infra projects. The demand for cement is likely to accelerate and with this context, one can easily grab the opportunity.
REC on the weekly charts is showing strong strength ahead of the Union Budget. RSI of REC is in strong momentum which gives strength to the counter.
On the higher side, REC again has potential to touch Rs 129+ levels in the near term. MACD histogram indicator shows on every dip there is a base building in this counter. One can buy REC on every dip.
IDFC Bank is moving upward trading in a range of Rs 45.30-47.50 from the last couple of days. An ascending triangle has formed in the last 7 days on charts.
A breakout above Rs 47.50 could push the stock towards Rs 49.50. RSI indicators show positive momentum currently at 75 on daily charts.
NIIT Technologies is consolidating from last many days. It breaks its previous hurdle of Rs 1,280 that shows positive momentum. Weekly charts show some strong upside ahead for the stock. RSI at 72 means a positive trend is intact in this counter.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.