The market rally following Finance Minister Nirmala Sitharaman’s speech speaks a lot about the budget, which shocked investors pleasantly.
Following last week’s market massacre, the Union Budget provided much-needed comfort by providing essential stimulation to the middle class in the form of tax savings.
According to economists, the tax break will raise discretionary money in the hands of the average taxpayer, boosting consumer spending and benefiting sectors such as retail, FMCG, and automotive.
Aside from a tax cut, the FM suggested a capital investment allocation of 10 lakh crore for FY2024, an increase from 7.5 lakh crore last year. These and other announcements have provided encouraging signals to metals, hotels, railways, and prominent telecommunications companies.
Here are the top stocks predicted to benefit from the budget releases by analysts :
According to ICICI Securities, the proposal to establish 100 labs for the development of apps using 5G services in areas such as E -learning (smart classrooms), healthcare, and smart cities is a plus for the top two telecom providers, Reliance Jio and Bharti Airtel.
According to economists, a capital spending of 2.4 lakh crore projected in the budget for the railways’ sector will also benefit metal companies.
Despite the increase in NCCD, ITC remains positive:
Despite a 16% rise in national calamity contingent tax (NCCD) on particular cigarettes, researchers believe the higher charge will have little effect on volume.
“We expect the jump in NCCD will not have a meaningful impact on total cigarette volume growth for the industry since it indicates only a 1-2% price rise. “We are bullish on ITC and expect volume growth to stay constant in the future,” said Preeyam Tolia, senior research analyst, FMCG & retail at Axis Securities.
There is much to celebrate in the automotive industry:
Furthermore, the auto industry has reason to rejoice because the budget eliminated customs duties on capital goods imported for the manufacture of lithium-ion batteries used in electric vehicles (EVs). The measure is intended to lower the cost of EVs in the country.
Another positive is the proposed lowering of basic customs duty rates on commodities other than agriculture and textiles from 21% to 13%, which is projected to enhance consumer spending by salaried consumers.
Furthermore, the finance minister stated that the federal government would devote more funding for the destruction of outdated vehicles.
“In addition to the vehicle scrappage strategy announced in Budget 2021-22, further money have now been earmarked to support central government efforts to scrap obsolete vehicles. States would also be assisted in scrapping outdated vehicles and ambulances “Sitharaman stated in her budget speech.
This is expected to strengthen the commercial car industry.
According to Crisil, the significantly increased capex allocation will benefit the commercial vehicle industry and be beneficial to multi-axle vehicles and tippers.
“Increase in expenditure on infrastructure, setting up of 50 new airports and heliports, establishment of 100 transport infrastructure projects are positive initiatives, in addition to the government support for replacing obsolete vehicles. “All of these should increase vehicle consumption and overall demand,” said Banwari Lal Sharma, CEO of CarTrade Tech’s consumer business.
Hotel stocks are among the most popular:
On Wednesday, hotel stock jumped after the finance minister declared that the government will boost tourism in the country.
“Tourism promotion will be undertaken on a mission basis with the active engagement of states, the convergence of government programs, and public-private partnerships,” Sitharaman stated in her budget speech.
Tourism has significant untapped potential. She said that the sector provides several prospects for youth employment and entrepreneurship.
“The tourist sector is getting a lot of attention in the budget. 50 domestic destinations will be chosen and promoted. Domestic tourism will be marketed as a viable alternative to foreign travel. Samhi Hotels, Oyo, and Ixigo have all announced plans to go public in 2023. “If you look at Easemytrip, which was listed in 2021, it has built enormous value for investors (and) is also announcing high topline and bottomline growth,” said Manish Khanna, co-founder of Unlisted Assets.
The specific push to the tourist sector is expected to draw more tourism enterprises to the listed space.
“We would see several companies in this industry going in for IPO from the unlisted space. “Some of the burn firms, like as Oyo, are expected to be operationally profitable in FY23, which is a significant benefit coming out of the covid dip,” Khanna said.
The plan to boost the tax collected at source (TCS) levy from 5% to 20% on abroad tour packages, on the other hand, will have a detrimental impact on the tourist business.
“This would not only raise clients’ upfront cash outflow but will also offer foreign-based online travel booking platforms an unfair edge over India-based travel brokers and tour operators,” said Rajesh Magow, co-founder and global CEO of MakeMyTrip.