Addressing the Governing Council Meeting of Niti Aayog on February 20, Prime Minister Narendra Modi said the central government had introduced the production-linked incentive (PLI) schemes for various sectors,
an excellent opportunity to increase manufacturing in the country.
Aatmanirbhar Bharat campaign is the way to build an India that produces not only for its own needs but also for the world, he said.
Read more: States should attract investment using production-linked incentive scheme
On November 11, 2020, the Union Cabinet approved the PLI scheme for 10 sectors - pharmaceuticals, automobiles and auto components, telecom and networking products, advanced chemistry cell battery, textile, food products, solar modules, white goods, and specialty steel.
It will be operational for five years with a total estimated outlay of Rs 1.45 lakh crore. The scheme will be implemented by the concerned ministries and departments. Savings from one PLI scheme of an approved sector can be utilised to fund another sector.
Brokerage firm William O'Neil India pointed out PLI scheme of the government aims at providing incentives to the companies with a vision of making India a hub for manufacturing and exports.
Under the scheme, eligible entities receive incentives on incremental sales from products manufactured in domestic units. The scheme has been introduced to spur domestic manufacturing and reduce import bills.
As per William O'Neil India, PLI scheme will bring additional investments to the tune of Rs 11,000 crore in the field of electronics manufacturing. Also, the scheme will generate job opportunities both directly and indirectly, calibrating the consumption power of the people.
The government approved a Rs 12,195 crore PLI scheme for telecom gear manufacturing, which will position the country as a global powerhouse for the production of such equipment ahead of the 5G rollout, said William O'Neil India. The scheme is estimated to generate 40,000 direct/indirect employment opportunities. It is also likely to generate tax revenue of Rs 17,000 crore from telecom equipment manufacturing.
Stocks to benefit
Amber Enterprises India: The Punjab-based company engages in the manufacturing of home appliances such as air conditioners, microwave ovens, refrigerators, washing machines, heat exchangers, plastic extrusions, and vacuum forming.
"The stock, from a technical standpoint, is comfortably placed above its key moving averages, around 24 percent and 62 percent from 50- and 200-DMA," said William O'Neil India.
"The stock broke from a 10-week stage-three consolidation pattern and made a 'power to pivot flag'. It has a fair EPS Rating of 72 and a strong buyer demand of A+. RS Rating of 82 is trending higher. The number of funds holding the stock increased 40 percent QoQ in Q3FY21."
Dixon Technologies: Dixon Technologies is the leading player in the electronic services manufacturing (EMS) space in India.
As per William O'Neil India, the stock is comfortably placed above its key moving averages, around 33 percent and 108 percent from 50- and 200-DMA.
"It has a great EPS rank of 97 and a strong buyer demand of A+. RS rating of 96 is trending higher. The number of funds holding the stock increased 49 percent QoQ in Q3FY21," said William O'Neil India.
Crompton Greaves: Crompton Greaves is one of India's leading consumer electrical companies present in the electrical consumer durables and lighting segments.
"The stock broke out from a flat base pattern in December, and it is currently hovering around its 50-DMA. It has a good EPS rank of 88 and a good buyer demand of B+. It has a fair RS rating of 67, which is trending
lower. The number of funds holding the stock increased 30 percent QoQ in Q3FY21," said William O'Neil India.
Sterlite Technologies: As per brokerage firm William O'Neil, the stock advanced more than 14 percent after a flat base pattern breakout on December 29, 2020, and is trending in the bullish territory above all key moving averages.
"It has a buyer demand of A with a fair EPS rating of 79. Good RS rating of 76 with upward trending RS line. The stock is facing resistance near its 200-WMA on the weekly chart. Once the stock crosses the price of Rs 210–215, it will open a new upside window and give another rally in the coming weeks and months," said William O'Neil.
Tejas Networks: The stock has fair EPS strength of 71 and a good buyer demand of A+. RS rating of 97 is good and RS line is trending higher, said William O'Neil India.
The number of funds holding the stock also increased 29 percent QoQ. The stock has given a breakout with cup formation on February 5 and is trending higher with all key moving averages, said the brokerage firm.
Divis Laboratories: "The company has a good fundamental and technical profile with an EPS rank of 90 and a good buyer demand of B+," said William O'Neil India.
"RS rating is currently placed at 50 and has staged a downside reversal over the last six weeks. The stock recently broke out on November 9, 2020, and advanced around 14 percent post that. Currently, the stock is making a pattern of a cup-with-handle formation and may give another chance to buy once it breaks above Rs 3,920–3,925."
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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