The Union Budget comes amid an unprecedented pandemic which has changed the economic landscape materially. This is the first instance where India has seen an economic contraction in the last many decades, and also the first GDP decline since the country began publishing quarterly numbers in 1996.
There is euphoria on D-Street on key reforms that could push growth and kickstart capex cycle in the economy. “We expect positive announcements on reforms viz. key reforms in labour laws & judicial reforms, which will support a recovery and re-ignite animal spirits,” domestic brokerage firm Sharekhan said in a note.
“Measures to help iron out bottlenecks and boost industry and employment will be positive. Moreover, a multi-year roadmap for the economy and a policy framework to boost GDP and exports is likely to be shared,” said the note.
The revised deficit figures for FY21 are unlikely to be a major surprise. In fact, Sharekhan is of the view that the government is expected to limit the fiscal deficit to ~7% of GDP, despite higher expenditure and lower revenues for this fiscal.
The economic recovery has surprised pleasantly and is set to turn positive in Q3 FY2021 itself after the massive decline of 23.8% in Q1 FY2021.
Key sectors to watch out for:
Sharekhan is of the view that it is imperative for the Centre and states to continue with counter-cyclical fiscal measures to sustain the momentum of the recovery.
Hence, the government may maintain its focus on the development of infrastructure (roads, water, and affordable housing) that would give the economy a much-needed earnings/employment stimulus.
Further extension/granularity of PLI schemes to spur manufacturing might also be announced in the Budget. There could be some initiatives to support the urban poor especially from the disruption in the MSME sector.
Infrastructure, Real Estate, Construction, and Railways are some sectors, which may be in focus in the upcoming Budget 2021
Large-caps: L&T, Hero MotoCorp, UltraTech Cement, Ashok Leyland, M&M, HPCL, IGL, and SBI.
Mid-caps: BEL, Coromandel International, KEC International, KNR Constructions, Century Plyboards, and Carborundum Universal.Disclaimer:
The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.