Here are the key themes likely to be in focus post Budget

Experts believe that companies in the gold and gems & jewellery segment will benefit with the reduction in import duties and increase in taxation on other asset classes.

From rural consumption to space tech, Finance Minister Nirmala Sitharaman presented a Budget with a mixed bag of announcements that many view as a balancing act between pleasant surprises and mild shocks.

“While the budgeted spending on infrastructure, rural and agri has remained same as interim budget, it maintains a fine balance between improving efficiency in agriculture, supporting rural economy and keeping the focus intact on infrastructure spending given limited time left in the current fiscal year,” said Rahul Singh, CIO, Tata Mutual Fund.

While there were many announcements across sectors, market experts believe that the following would be the key themes going ahead.

Gold

Experts believe that companies in the gold and gems & jewellery segment will benefit with the reduction in import duties and increase in taxation on other asset classes. “There is a big cut in customs duty on gold to 6 percent leading to a commensurate decline in gold prices. However, such changes are very important for a healthy gold market in India as it reduces the price anomalies to a large extent from gold prices in India,” says Chirag Mehta, CIO, Quantum AMC. Stocks under this theme include Titan, Mannapuram Finance and Kalyan Jewellers.

Consumption
With a significant boost to rural consumption, the Finance Minister announced an outlay of Rs 2.66 lakh crore across government schemes aimed at boosting rural infrastructure and consumption. According to Samir Bahl, CEO - Investment Banking, Anand Rathi Advisors, the focus on MSMEs and Rural development along with tax benefits to middle class will result in a boost for demand and consumption. He expects all major consumer companies that cater to rural India and mass consumption to benefit going ahead. Stocks in this segment include Godrej Agrovet, HUL and Dabur.

Also read: Five key stocks expected to benefit from the Budget

Power & Infrastructure

As a part of the Union Budget, Finance Minister Nirmala Sitharaman emphasised on the government's focus on energy security and transition. While no new schemes were announced, experts believe that policy continuity and further announcements in the coming days could boost the segment such as a policy for promoting pumped storage projects for electricity storage, research & development of small and modular nuclear reactors through partnerships with the private sector and the development of advanced Ultra Super Critical Thermal Power Plants.

Rupeeting’s Sagar Lele notes that a lot of work was already laid out in previous budgets. “It is more of a long-term theme,” he says. Beyond the obvious focus on renewable energy, Lele notes that there is significant attention on revamping and creating an overall transition in the grid. “This involves investments in meters, measurement systems, transmission lines, and making the entire grid smarter with IoT. Despite the allocation amount, work on this front is long-term, and I remain positive about the power sector for the next three to five years, especially in the ancillary areas like Hitachi Energy, which supports smart grid implementation,” he says.

On infrastructure, he adds that another significant announcement was focus on regions such as the North East, Bihar and Andhra Pradesh. “This can lead to increased cement consumption in these regions, benefitting local players and the cement sector overall,” he says.

Skill development and job creation

Deepak Jasani, Head of Retail Research at HDFC Securities believes that job creation could be an important theme going forward. Companies that are engaged in creating jobs or helping upskill people to get new jobs could get better, he explains. These include manpower companies like Quest Corp, NIIT and Veranda Learning.

Financial Services

Anand Rathi’s Bahl believes that financial services as a theme could also benefit in the long run due to removal of indexation on real estate transactions. Additionally, the LTCG holding period for stocks is one year while for real estate it is two years. “These factors will see a further shift of investments into stock market despite LTCG rates going up,” he says. This includes major mutual fund's as well as broking firms like Angel One.

Affordable housing

Lele believes that affordable housing could also be a big theme going ahead. “Affordable housing and PMAY (Pradhan Mantri Awas Yojana), continues to support demand for building materials like cement, pipes, cables, ceramics, and metal castings. Companies like Astral, APL Apollo, and those in the ceramics and cable industries should continue to be focus stocks,” says Lele.

While the Finance Minister also made announcements on Space Technology and Waste and Water management, most experts believe that it is too early for them to have concrete results. Nirav Karkera, Head of Research at Fisdom believes that while it is in a nascent stage, in the long-term it could benefit many defence players. Some water management players include Va Tech Wabag and Anthony Waste Management.

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