With a couple of days left before the 2020 Union Budget announcement, market participants are hoping for policies that can strengthen domestic markets. Analysts expect the government to focus on stimulating growth and boosting consumption amid the ongoing economic slump.
Here are some likely budget announcements and stocks that should be watched on the budget day, according to analysts at HDFC Securities, ICICI Securities and Antique Broking:
Reduction in personal income tax rates
Positive for all consumption linked companies and high dividend companies like MNCs, IT, auto, metals, oil and gas.
Stocks in focus
FMCG: Hindustan Unilever, Colgate Palmolive India, Dabur Ltd and ITC Ltd.
Consumer appliance makers: Symphony and Crompton Consumer
Auto: Bajaj Auto, Hero Moto, Eicher Motors and Maruti Suzuki
Increase in budget allocation for infrastructure projects
Construction engineering, procurement and construction companies (EPCs), metro rolling stock manufacturers and metro signaling technology players would benefit. Road EPC players to strengthen rural connectivity.
Stocks : Larsen & Toubro, Sadbhav Engineering, J Kumar Infraprojects, UltraTech Cement, Ambuja Cement and ACC, KEC International, Kalpataru Power and JMC Projects.
Steps to push rural demand
The government is expected to push rural demand by increasing allocation to various rural-centric schemes. The government may announce some more policy measures in order to achieve its target of doubling farmer income by 2022. This will be positive for consumption and agriculture-related stocks.
Stocks : M&M, Escorts, Hero, TVS, Bajaj Auto, Hindustan Unilever, Colgate, Dabur, Emami, Jyothy Lab, Bajaj Electrical, Crompton Consumer and Dhanuka Agrotech.
Sops for real estate sector
Finance minister Nirmala Sitharaman is likely to make announcements for the realty sector that may include expansion of the definition of affordable housing by carpet area or ticket price. Improving liquidity in the real estate sector, increase in deduction limit for home buyers and enhanced benefits of affordable housing projects may be on the cards.
The move will be positive for real estate, housing finance companies (HFCs) and banks.
Stocks : Brigade Enterprises, Mahindra Lifespaces, HDFC, LIC Housing Finance, Aavas Finance, Canfin homes, Axis Bank and State Bank of India.
Import duty on electronic goods may be raised
This could provide a level playing field for domestic manufacturers with their foreign counterparts.
Stocks : Symphony, Crompton Consumer, Salzer Electronic, Orient Electric Ltd, Havells India and V Guard.
Steps to develop broader debt market
The government is likely to take steps to improve the corporate debt market resulting in better price discovery and higher treasury operations. This could benefit broking companies even though the holding period may be extended to two years versus the current one year. It is also expected that long-term capital gains tax on equities and equity mutual funds may be abolished.
Stocks : ICICI Securities, Motilal Oswal, BSE Ltd and CDSL.
