Investors were, however, caught off guard due to the increase in LTCG and STCG tax rates, leading to a knee-jerk reaction on D-Street.
“While the budget maintained infrastructure spending at the same level as the interim budget, disappointing expectations of a higher allocation from the RBI dividend, infrastructure stocks are likely to exhibit a gradual positive bias. On the positive side, increased focus on agriculture research and horticulture bodes well for companies like Avanti Feeds. The consumption sector is also expected to benefit from certain sops announced in the budget, with housing finance and cement stocks likely to be key beneficiaries,” said Sonam Srivastava, Manager and Founder, Wright Research.
Here are 10 sectors which tend to benefit from Budget announcements:
1) Jewellery stocks
To enhance domestic value addition in gold and precious metal jewellery in the country, Finance Minister Nirmala Sitharaman has reduced customs duties on gold and silver to 6% and that on platinum to 6.4%. This may lead to a decline in domestic prices and lift demand. The existing duty on gold and silver is 15 percent which comprises 10% of basic custom duty and 5 percent as Agricultural Infrastructure Development cess.“This policy change is expected to significantly benefit companies like Titan and Kalyan Jewellers, enabling them to optimize their supply chains. This will increase their profit margins, and pass on cost savings to consumers,” said Siddhesh Mehta, Research Analyst, Samco Securities.
2) Solar stocks
Budget has expanded the list of exempted capital goods for use in the manufacture of solar cells and panels in India. PM Surya Ghar Muft Bijli Yojana has generated remarkable response with more than 1.28 crore registrations and 14 lakh applications.“The Surya Ghar Muft Bijli Yojana offers free electricity up to 300 units per month to 1 crore households. This initiative will lower energy costs, improve living standards, and support economic stability. It enhances energy access and promotes sustainable development, benefiting low-income families and local economies. Additionally, it will benefit companies involved in rooftop solar solutions, such as Tata Power, Adani Green Energy, and Waaree Energies Limited,” Divyam Mour, Research Analyst, Samco Securities, said.
3) Bank stocks
The limit of Mudra loans will be enhanced to Rs 20 lakh from the current Rs 10 lakh for those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun’ category.
“Mudra loans are disbursed through PSU banks, small finance banks, and NBFC. Hence, the announcement of a limit extension will benefit companies like SBI, Bank of Baroda, Bank of India, Union Bank of India, AU Small finance banks,” Raj Gaikar, Research Analyst, SAMCO Securities, said.
4) Manufacturing
Manufacturing sector has been fixed as one of the 9 priorities for Sitharaman in the Budget. It aims to incentivize additional employment in the manufacturing sector, linked to the employment of first-time employees.
“This initiative will reimburse employers up to Rs 3,000 per month for two years towards EPFO contributions for each additional employee, aiming to incentivize the additional employment of 50 lakh people,” said Aamar Deo Singh of Angel One.
5) Digitisation theme
Sitharaman has announced that land records in urban areas will be digitized with GIS mapping. She has also announced implementation of Digital Public Infrastructure (DPI) in agriculture for coverage of farmers and their lands in 3 years. During this year, a digital crop survey for Kharif using the DPI will be taken up in 400 districts. The details of 6 crore farmers and their lands will be brought into the farmer and land registries.
The news is positive for listed companies like Benefiting companies like CDSL, CE Info Systems, Genesys, etc.
6) Consumption stocks
FM has announced that the standard deduction for salaried employees in the new tax regime will increase from Rs 50,000 to Rs 75,000, which would result in savings of around Rs 17,500 in net taxes in the hands of individuals.
“This would benefit directly to the companies in the FMCG segment such as HUL, ITC, Dabur, Nestle and second order beneficiaries would be suppliers to these FMCG giants such as Polyplex, Uflex. Further, increased saving would also boost the inflow to wealth management (AMC’s) in the form of SIPs, and to stock broking companies through brokerage,” T Manish, Research Analyst, SAMCO Securities, said.
7) Housing
The allocation of Rs 10 lakh crore for housing the urban poor is poised to significantly enhance the profitability of small ticket-size housing finance companies. Companies such as LIC Housing, PNB Housing, HUDCO, and Aadhar Housing Finance are expected to see an upward trajectory in revenue and PAT in the coming quarters, this potentially drives a surge in their share prices in the longer run, said Raj Gaikar, Research Analyst, SAMCO Securities.
8) Auto
Budget has made a provision of Rs 2.66 lakh crore for rural development including rural infrastructure. “Skill development initiatives are expected to lead to more rural employment. This would increase income levels in rural areas and could result in higher discretionary spending. Consequently, two-wheelers and entry-level passenger vehicles could see increased demand from rural India, benefiting companies like Hero Motocorp and Maruti Suzuki. Additionally, since many vehicle purchases are financed to some extent, any interest rate cuts going forward could improve the demand for automobiles,” says Amar Nandu, Research Analyst, Samco Securities.
9) Capital goods
Budget also saw a cut in basic customs duty on mobile phones, mobile Printed Circuit Design Assembly (PCDA), and mobile chargers to 15%, recognizing the growth of the Indian mobile industry. This change will reduce costs and support Indian manufacturers which will benefit players like Dixon Technologies.
10) Housing finance
Under the PM Awas Yojana Urban 2.0, housing needs of 1 crore urban poor and middle-class families will be addressed with an investment of Rs 10 lakh crore.
“Housing finance companies, particularly those focused on low ticket housing, would also be beneficiary of the PM Awas Yojana. Having said that, the disbursements under such schemes in the past have made up a very small proportion of the loan books of these companies. On balance, we believe that these announcements are marginally positive for the sectors,” said Tejas Gutka, Fund Manager, Tata Asset Management.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)