14 tech stocks in focus as FM Sitharaman gears up to table Budget 2024

The discussion around capital gains is complex, says Radhika Gupta, CEO, Edelweiss Mutual Fund

As Finance Minister Nirmala Sitharaman is expected to start her Budget speech in less than an hour, all eyes are on some tech stocks that stand to be impacted the most by the announcements she makes.

Here are the 14 technology sector stocks that should be tracked today:

The IT services bellwether and the country’s largest software exporter continues to trade strongly on the stock exchange having seen a price uptick of nearly 26 percent in the past one year. Share prices of Wipro and Infosys, the two Bengaluru-headquartered IT service majors, have jumped over 25 percent in the last year, because of the sentiment that potential recovery in the sector might be around the corner.

The Street’s optimism on Artificial intelligence and generative AI bringing demand and innovation for the IT sector despite macro challenges has been a major factor driving this. Any regulatory updates, new initiatives announced during the budget to boost India’s AI mission and skilling will be watched out for as this will directly impact companies like TCS and its customers spending millions of dollars at this point build Gen AI use cases.

Moreover, regulatory clarity and incentives would also mean more MNCs setting up their Global Capability Centers (GCCs) in the country – another segment of customers for IT companies as well. Government-level initiatives and investments coming from GCCs were also highlighted in detail in the Economic Survey 2024.

As the consumer tech major plans to increase its focus on the live entertainment sector, apart from expanding its quick commerce and food delivery arms, the company's stock may benefit from any Budget announcements that give a push to consumption such as lowering of income tax rates. The stock has risen by 169 percent in the last one year and is currently trading at Rs 218.44 apiece on the NSE. It opened today at Rs 222.5 apiece.

Electronics manufacturing services (EMS) stocks have seen significant growth in recent years, delivering outstanding returns for investors. Dixon Technologies, for instance, has soared by 2,443.18 percent over the past five years, surging from Rs 376.87 in July 2019 to Rs 11,210 currently. The stock opened at Rs 11,430 on the NSE on July 23. The company stands to benefit further from government incentives aimed at boosting manufacturing and electronics production. As India strives for self-reliance, the upcoming budget is expected to further incentivise local electronics production.

The logistics unicorn's stock price has not performed well since its listing in May 2022. It has dropped 4 percent in the last one year as the company has struggled with profitability. Any Budget announcements that give a push to sectors like e-commerce, automobiles, MSMEs -- which are its main customer segments -- may boost Delhivery's stock price.

Any enhanced UPI subsidies as well as for digital payments could bring good news to Paytm, which is struggling with lower payment margin since the RBI curbs on its associate company Paytm Payments Bank Limited.

Founded by three IIT Bombay graduates (CEO Ankit Mehta, VP Ashish Bhat, VP Rahul singh) other than the company's CFO Vipul Joshi, this Mumbai-based drone company has been one of the early adopters of drone ecosystem in India. The company's results for the FYQ1 2024 indicated significant growth and improvement in several key metrics compared to the same period in the previous year. Technical indicators suggest that the stock has good financial performance alongside good to expensive valuation, but lacks price momentum. As on NSE, ideaForge on July 23, opened at Rs 825.25 per share. With its key customers in the defence sector, traders would be keenly observing at this year's budget for allocation in relevant ministries, any sort of policy announcements and so on. The company has also been spending significant amount of its budget into research and development, and has plans to venture into the US market going forward.

Travel and tourism has been one of the focus areas of the government and travel aggregators like EaseMyTrip are likely to benefit from the government's measures to boost domestic tourism. Key events this year like the Indian Premier League (IPL) led to a 20-25 percent surge in flight bookings while hotel bookings increased by 15-20 percent on EaseMyTrip. However, shares of the company have been in the red and down 4 percent in the last 12 months on the NSE. It currently trades at Rs 40 a piece on the exchanges. In the March quarter of FY24, the online travel aggregator had slipped into red as it reported a loss of Rs 15 crore as against a profit of Rs 31 crore during the same period a year ago. This is the first time the company incurred a loss in at least three years.

Nykaa has seen its revenue and profits be largely range bound over the past year or so. In the last 12 months, share prices of FSN e-commerce, the parent company of Nykaa, have gained only around 22.5 percent and still trades below its IPO price. While the increase is decent, it is behind expectations that investors have from new-age tech companies. Any relief in income tax, which leaves more disposable income in the hands of people, will likely be a positive cue for the beauty and personal care brand. The shares were changing hands at Rs 176.1 apiece in early trade on July 23 (around 9:30 am) on the BSE.

Nazara Technologies has seen its stock rise 34 percent in the past year. The stock opened at Rs 877.95 on NSE on July 23.

The diversified gaming and sports media firm could benefit from any measure that supports game development, infrastructure or growth of esports in the country. It could also benefit from any measure introduced to bring better tax clarity to real-money gaming industry.

Mega changes are expected to take place in insurance sector in the upcoming Budget 2024, including introduction of bill amending the Insurance Act, 1938, aiming for 'Insurance for All by 2047', and the much-awaited composite license for insurers to provide life, health and general insurance policies.

Further, Indian insurance companies are eyeing multiple tax exemptions from the central government in the upcoming Budget to enhance attractiveness and affordability of insurance products, thereby promoting greater penetration nationwide.

Shares of PB Fintech, which recently received the nod from the IRDAI to upgrade its license from a direct insurance broker to a composite insurance broker, and its newly-listed peer Go Digit may benefit from the announcements.

Honasa Consumer, which made its public market debut in November last year, has outperformed expectations and already gained around 36 percent in around nine months, with more upside on the horizon. The share currently trades at Rs 458.10 apiece on the NSE. It may further gain if the government announces measures that will leave more disposable income in the hands of people outside the metro cities as a bulk of Honasa’s sales come from non-metro cities. Honasa runs brands like Mamaearth. Further, any policies that will be favourable for sellers on Amazon, Flipkart and other marketplaces will be a positive for the stock as the company is heavily reliant on e-commerce for its sales.