• by Stocktry Expert
• 02nd Feb 2021

Stocks Suggested by Analyst That Could Gain from Union Budget 2021

The Union Budget 2021 connects capital to infrastructure, appreciated the Analysts.

“We expect this Budget rally to extend further. However, participants should be selective in their approach now. Going ahead, global cues and corporate earnings would also be on the radar. The way the banking index moved today, we feel it could lead the next leg of the rally alongside infra counters,” said Ajit Mishra, VP - Research, Religare Broking.

Here’s a collated list of the stocks that analysts believe could gain from Union Budget 2021:

1. Beverages: The government has reduced basic customs duty to 50 percent from 150 percent. “This is likely to lead to a status quo. Not much change as it seems more of government re-allocation between departments,” said Edelweiss Securities. As the government has provided a growth fillip to the overall economy, alcohol stocks like United Spirits and Radico Khaitan NSE -0.21 % will find favour.
2. Road & Infra: The government's record high capital outlay of Rs 1.08 lakh crore for the road ministry might turn out to be in favor of the market. Analysts said stocks like Dilip Buildcon, IRB Infrastructure and Ashoka Buildcon might boost.
3. Cement: Cement sector stocks like UltraTech Cement, Shree Cement, Ambuja Cements, and ACC are expected to benefit from the government’s 34.5 per cent higher outlay on capital expenditure in 2021-22.
4. NBFCs: Government's proposal to reduce the eligible loan amount for recovery under the SARFAESI Act for NBFCs might work in favor. “It will help in strengthening the NBFC sector by improving credit discipline among borrowers,” said VP Nandakumar, Managing Director & Chief Executive Officer, Manappuram Finance. Analysts also said some of the top beneficiaries could be Bajaj Finance and other top NBFCs.
5. Jewellery: The reduction in import duty from 12.5 percent to effectively 10 percent on gold and other precious metals will make jewelry cheaper. Analysts suggest tracking jewellery makers such as Titan.
6. Banks: Karthik Srinivasan, Group Head - Financial Sector Ratings, ICRA said, “Budgeted recapitalisation of PSBs is largely in line with estimates for near-term growth, assuming banks are able to reissue bulk of the AT1s which have call option due over the next 12 months.” According to analysts, HDFC Bank, Axis Bank, ICICI Bank, IndusInd Bank and Kotak Mahindra Bank, along with SBI and other top PSU banks, will be in focus in coming sessions.
7. Insurance: The government proposed to raise FDI in insurance to 74 percent which is bound to attract enhanced flow of capital to the sector. Besides, selling one state-owned insurer will also bring efficiency. SBI Life, ICICI Pru Life, ICICI Lombard General Insurance and HDFC Life are among the top picks from the sector.
8. Real estate: Steps like a one-year tax holiday for affordable housing projects and an extension for an additional deduction of interest up to Rs 1.5 lakh on loan for affordable housing will benefit all stakeholders of the industry and boost investments, said analysts. Indiabulls Real Estate, Oberoi Realty NSE 0.18 % and Prestige Estates Projects are some of the top picks from the sector.