Mutual funds bet on these sectors likely to benefit from Budget 2024
FMCG, manufacturing, infrastructure, power, banks, housing and agriculture are the few sectors likely to benefit from the announcement made in the Union Budget 2024. Active fund managers hold significant allocations in these sectors
The Union Budget announced on July 23, 2024 has prioritised the creation of new jobs and boosting rural consumption. Experts believe that the provision for boosting spends in the agri sector, increase in spend on affordable housing and new schemes to provide incentives for employment generation may lay the foundation for medium term inclusive growth. Meanwhile, the budget has left the capital expenditure for the financial year 2024-25 unchanged from the interim budget at a record Rs 11.11 lakh crore. Here are the key sectors and themes in which active equity mutual funds hold significant allocations are likely to benefit from the announcements made in the budget 2024, according to the experts. (Portfolio data as of June 30, 2024. Source: ACEMF).
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Infrastructure Budget 2024 once again lays emphasis on the infrastructure segment. Focus on urban development, energy transition, housing, water supply and sanitation augurs well for the sector. The budget has left the capital expenditure for the financial year 2024-25 unchanged from the interim budget at a record Rs 11.11 lakh crore. “The Budget maintains its focus on long term growth and sustainability and is positive towards infrastructure segments," says Subahoo Chordia, Head - Real Assets Strategy, Edelweiss Alternatives. The additional interest free loan of Rs 1.5 lakh crore to states will give a boost to infrastructure, so will the plans for roads, new airports and more industrial parks, says Chordia.
Power “The power sector is poised for significant growth due to the government's strategic focus on energy security and sustainability” says Nirav Karkera, Head of Research at Fisdom. The emphasis on infrastructure investment, particularly in renewable energy, indicates a strong commitment to reducing dependency on conventional power sources. The development of advanced technologies like AUSC thermal power plants and small modular nuclear reactors suggests a forward-thinking approach that will enhance efficiency and capacity, adds Karkera.
4/10
FMCG Substantial investment in rural infrastructure will boost incomes and enhance consumption, positively impacting the FMCG market. “The FMCG sector is set for robust growth, driven by comprehensive rural development and strong support for MSMEs,” says Karkera. Support for MSMEs, especially in manufacturing, will enhance product quality and competitiveness, allowing FMCG companies to meet rising demand effectively.
Manufacturing The government has continued with their core principles of fiscal prudence and capital asset formation in the country through long term strategic interventions. “Targeted changes like enhancements of customs duty rates in select sectors, credit relaxations for MSME units, abolishment of Angel tax, shall provide the required impetus to the manufacturing sector” says Saurabh Agarwal, Tax Partner, EY India.
Auto “Allocation to a PLI scheme for Automobiles and Auto Components increased to Rs 3,500 crore in FY25 from Rs 484 crore in FY24 revised estimate is positive for the auto sector as it would increase profitability of the companies/projects accepted under the scheme,” says Deepak Jasani, Head, Retail Research, HDFC securities.
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Agriculture Finance Minister Nirmala Sitharaman has allocated Rs 1.52 lakh crore for farming and allied sectors in the financial year 2024-25 which is positive for the sector, rural incomes and consumption. The government’s plan to release 109 new high yielding, climate resilient seeds for 32 field and horticulture crops is likely to benefit seed companies.
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Banking “Though no sectors seem to benefit much directly, banks continue to be in a good place because 1). Fiscal discipline has been maintained, 2). Govt borrowing will not crowd out private investments, 3). The budget is not inflationary and 4). More room for growth without the cycle piling up non-performing loans”, says P Krishnan, MD & CIO, Spark Asia Impact Pvt Ltd.
Housing Urban and rural housing have seen higher outlays. This should benefit affordable housing in the long term, says Krishnan. According to a post-budget research report by Elara Capital, the PM Awas Yojana - Urban's investment of Rs 10 lakh crore catering to 10 million urban poor and middle-class families will benefit the affordable housing companies.
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Industrial The industrial sector can benefit from the budget in several ways, says Ravi Kumar T V, Founder, Gaining Ground Investment Services. The continued focus on infra development including roads, railways, ports can enhance logistics. The support for MSMEs with enhanced credit schemes and supply of skilled labour is essential for industrial growth. Also, the incentives for renewable energy projects can help industries reduce energy costs. All these foster a conducive environment for industrial growth and drive economic development, adds Kumar.
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![Infrastructure Budget 2024 once again lays emphasis on the infrastructure segment. Focus on urban development, energy transition, housing, water supply and sanitation augurs well for the sector. The budget has left the capital expenditure for the financial year 2024-25 unchanged from the interim budget at a record Rs 11.11 lakh crore. “The Budget maintains its focus on long term growth and sustainability and is positive towards infrastructure segments," says Subahoo Chordia, Head - Real Assets Strategy, Edelweiss Alternatives. The additional interest free loan of Rs 1.5 lakh crore to states will give a boost to infrastructure, so will the plans for roads, new airports and more industrial parks, says Chordia. Also see: Midcap and smallcap funds: How should retail investors approach them?](https://images.moneycontrol.com/static-mcnews/2024/07/20240726045743_page-2.jpg "Infrastructure Budget 2024 once again lays emphasis on the infrastructure segment. Focus on urban development, energy transition, housing, water supply and sanitation augurs well for the sector. The budget has left the capital expenditure for the financial year 2024-25 unchanged from the interim budget at a record Rs 11.11 lakh crore. “The Budget maintains its focus on long term growth and sustainability and is positive towards infrastructure segments," says Subahoo Chordia, Head - Real Assets Strategy, Edelweiss Alternatives. The additional interest free loan of Rs 1.5 lakh crore to states will give a boost to infrastructure, so will the plans for roads, new airports and more industrial parks, says Chordia. Also see: Midcap and smallcap funds: How should retail investors approach them?")
