Considering the on-going challenges that the government is facing to maintain a balance between promoting growth and at the same time ensuring fiscal discipline, we would consider this as a decent budget focused on long term growth and thus assign a 3 rating, Jayant Manglik, President - Retail Distribution, Religare Broking Ltd, said in an interview with Moneycontrol’s Kshitij Anand.
Q: Which were the major winners and losers from Budget 2019?
A) The Budget was largely in-line with street expectations. The government has announced steps to promote the growth of the rural economy and boost agri income.
We feel this could be positive for agri stocks like PI Industries, Rallis India, GNFC, Godrej Agrovet. Further, consumer stocks like Dabur India, HUL, Colgate Palmolive India and Britannia Industries that have been witnessing volume pressure in rural areas will stand to be the key beneficiaries of these announcements.
Additionally, the government’s move to allocate Rs 70,000 crore for recapitalisation of public sector banks is encouraging, as it would mean more capital for PSU banks and comply with RBI capital requirement guidelines.
The step is positive for banks like SBI, BOB and Bank of India. Also, the government has proposed to move regulation of HFCs from National Housing Board to RBI, which would be positive for housing finance companies like HDFC, LIC housing finance, GIC housing, etc. as it would improve stability in the sector in the long term.
However, certain moves like an increase in customs duty on gold and precious metals from 10 percent to 12.5 percent were against market expectations of a reduction in the duty. This could negatively impact gold and jewellery companies like Titan, TBZ, Shirpur Gold and Rajesh Exports.
Further, custom duty on indoor and outdoor split ACs was hiked to 20 percent from the current 10 percent. This could negatively impact stocks like Voltas, Blue Star, IFB Industries and Whirlpool.
Q: How do you rate the Budget 2019 on a scale of 1-5 (5 being the best and 1 being the worst)?
A: We feel the budget has largely focused on creating a roadmap for the next five years to promote growth and investments in the Indian economy. These measures are expected to yield results over a longer period.
We feel, given the current slowdown in the Indian economy, the market was expecting few more and immediate growth measures/steps than what has been announced.
However, considering the on-going challenges that the government is facing to maintain a balance between promoting growth and at the same time ensuring fiscal discipline, we would consider this as a decent budget focused on long term growth and thus mark 3 out 5.
Q: Anything specific that could impact investors and markets.
A: The Budget had both its hits and misses. The government rolled out the roadmap for the next five years in order to promote growth, increase investment in key sectors like power and infrastructure.
However, the growth stimulus was lower than market expectations which could have a sentimental impact on the markets in the near term given the slowdown in the economy.
On the positive side, the government lowering its fiscal deficit target (3.3 percent in FY20 from 3.4 percent) would instil confidence amongst market participants.
Q: Top five stocks that investors can look at buying post the Budget.
A: Based on the announcements in the budget, we feel one can consider investing in companies like Dabur, Britannia, Godrej Agrovet, Rallis India, SBI, HDFC, and L&T. These stocks hold promising prospects and would stand to be key beneficiaries.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.