Budget is a balancing act where the revenues and expenditures need to be balanced. Recent actions by the Government like change in FDI norms for single brand retail and inviting a foreign airline bidder for Air India are showing an intent to cut unreasonable and unwanted cost heads for the government and boost the economy by inviting more foreign exchange inflow in the country.
Recently PM’s meeting with corporates, economists and representatives from different sectors of India just before the Budget session is raising hopes for a balanced and pragmatic budget. Like last year it is again expected that the sectors which will be most benefitted from the Budget will be rural agriculture, aviation, infra and auto sector.
This being the last budget by the NDA government before the state polls in 8 states during 2018 and a general election call in 2019, the government shall leave no stone unturned in impacting the lives of 125 crore Indians. Here are some sectors which may positively impacted by the Budget:
Rural & Agriculture
The key focus will remain the development of rural infrastructure under the Pradhan Mantri Gram Sadak Yojana. A Budget supporting agriculture sectors will give a real push all the companies which are directly or indirectly relates to agriculture segment fertiliser, seeds, irrigation equipment, tractors, etc. Stocks like Mahindra & Mahindra, Jain irrigation, UPL, Eicher motors, Rallis and Escorts, may turn out to be direct beneficiary of ensuing budget.
Budget may have a positive impact on infra and affordable housing also as government has a strong focus for providing home to all at affordable price. Government has set up a goal to double the farm income by 2022 and it seems quite dedicated to this mission considering the next year elections. A big expectation is that the Government may increase the exemption limit of interest payments under housing loan to Rs.3 lakh from Rs.2 lakh. Housing Finance companies being the hot favourite of 2017 may again remain in focus and companies like DHFL, Indiabulls housing finance, LIC housing finance and HDFC ltd. Will turn out to be beneficiary in this part.
Being a default theme of Budget for past few years, this year shall also fall in line. And why not, the meaning of Developing nation Budget is to assess and plan for the road map of the nation for the coming year and whatever is the expected expenditure on to overall development of the nation should be allocated to each sector in a balanced way. India being still far away from being a developed nation, Infrastructure is the sector which nation looks at every budget. Government is doing right thing to allocate a bit extra piece for this sector as it’s a demand of era and its prime responsibility of the government to provide better infrastructure facilities to people who are paying their hard earned money to government in the form of tax.
All the companies which are related to road construction, EPC contract management, construction matareial, bridge construction etc. should be direct beneficiary of the Budget.
Since government has merged the Rail budget with the general budget, the allocation to this sector has taken a big leap. All the companies related to Railways may see good volume and growth after the ensuing budget. In the last year budget government avoided introduction of new rails and focused on the betterment of current railway infrastructure. This year we can expact that the government may bring a mix bag to further strengthen the railway infrastructure along with introduction new trains. Modernisation of main railway stations will be the key for this year. Stocks like Titagarh Wagon, Temaco infra, Texmaco infra, BEML, Kernex Micro, Cimmco and other stocks which are directly or indirectly related to this sector will gain.
Auto and Auto Ancillary
Auto companies, despite higher costs are recording top-line growth. With the bigger chunk of population getting into the earnings mode, this becomes more of a necessity than luxury. Any cash benefit to any segment of population will directly lead to the growth in this sector. Tax benefit to salaried class or increasing cash income of rural clss will lead to growth in this sector also. Counters like, Escorts, Eicher motors, M&M, Bosch and Motherson Sumi will be strengthen.