India's policy shift to welfare spends warrants portfolio rejig, consumption plays to benefit: BofA

BofA remained cautious about most PSUs and the IT sector

Global brokerage firm BofA highlighted that India’s policy shift towards increasing welfare spending signals the need for a significant portfolio realignment. The firm expects sectors like consumption, staples, general retail, footwear, apparel, and luggage to be the primary beneficiaries of this shift, driven by rising welfare expenditures and state-led cash transfers.

These transfers, exceeding Rs 2.5 lakh crore, are boosting household incomes and driving demand in key consumption sectors.

BofA's strategy suggested that the sectors benefiting from welfare schemes—particularly staples, retail, and apparel—are poised for growth. The firm also extended its favorable outlook to healthcare, financials, telecom, and automobiles, seeing these areas as well-positioned to capitalise on broader economic and policy shifts.

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However, BofA remained cautious about most public sector undertakings (PSUs), the IT sector, and stocks with low market float, citing limited growth potential in the near term.

On the downside, the brokerage downgraded metals, energy, and cement sectors to 'underweight,' reducing their portfolio weightings due to concerns over profitability and demand. Industrial sectors tied to capital expenditure also face potential downgrade risks, as capex growth appears uncertain in the current environment.

Recently, the government launched Pradhan Mantri Janjatiya Unnat Gram Abhiyan (PMJUGA) for the development of tribal people. This transformative initiative targets socio-economic development of over 63,843 tribal- dominated villages across the country.

With a budget allocation of Rs 79,156 crore the program focuses on developing enabling infrastructure, promoting economic empowerment, universalising quality education and ensuring healthy lives and dignified ageing for the target beneficiaries. The scheme will be implemented in 549 districts and 2,740 blocks across 30 states and UTS, covering all tribal majority villages.

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