Finance Minister Nirmala Sitharaman will present her seventh consecutive Budget on Tuesday (July 23). This will be the first full Budget of NDA 3.0 after Lok Sabha elections results were declared on June 4. With the BJP falling short of majority and forming government with the help of NDA allies, analysts say the tone of tomorrow’s Budget could be different than the previous ones. This times emphasis is likely to be more on the rural sector, which could trigger rural consumption and add more strength to the economy. We take a look at sectoral expectations that JM Financials Research Team has from the Union Budget 2024.
The brokerage expects that the government would strike a balance between fiscal deficit, capex for growth and social spending. Markets would be keenly awaiting any adverse changes in the capital gain tax on equities. In case there is no change in capital gain tax it would be considered positive for Indian equity markets, said JM Financial.
Budget picks
Key Budget picks of JM Financial are Mahindra & Mahindra, Hero Motocorp, ITC, Sumitomo Chemical, RIL, Power Grid, NTPC, Sanghvi Movers, Bharat Electronics, Bharat Forge, VA Tech Wabag, L&T, DLF, Ambuja Cement, APL Apollo, PFC and IRCON.
Here’s a look at expectations the brokerage has from various sectors.
Metal and mining
The government is likely to allocate higher budgetary allocation towards construction and infrastructure sector that will increase the domestic steel demand. Stocks such as Tata Steel, JSW Steel, SAIL and JSPL are likely to be affected positively with any such announcement.
The Budget may also see reduction in import duty on raw materials or increase in the basic customs duty on imported Chinese steel. This will affect stock such as Tata Steel, JSW Steel, SAIL, and JSPL.
The government is also likely to announce financial incentives or further announcements on PLI schemes for the exploration of critical minerals. Coal India, NALCO and NMDC shares will be in focus post such a move.
Agriculture, fertilizers & chemicals
The government is likely to announce a fertiliser subsidy provision of Rs1.64 lakh crore as per interim budget which seems adequate for FY25. The brokerage expects substantial budget allocations for accelerating technology adoption (like Nano urea), boosting productivity, and improving storage infrastructure within the sector. Coromandel International, Chambal Fertilizers and Madras Fertilizers shares are likely to be key beneficiaries.
A PLI scheme for the Crop Protection sector is also likely as per the brokerage. Sumitomo Chemical, Dhanuka Agritech, Insecticides India and PI Industries will be in focus post such an announcement.
A PLI scheme for battery chemical manufacturers is also on anvil. Himadri Speciality, Gujarat Fluorochemicals and Neogen Chemicals shares will be affected.
Auto & Ancillaries
The government may announce incentives and subsidies to agricultural sector that will support rural discretionary spends and benefit rural-focused 2Ws and & entry-level 4W OEMs. Mahindra & Mahindra, Hero Motocorp shares will be in focus. The government is likely to announce an increase in allocation to FAME-III subsidy and shares of Ashok Leyland, Tata Motors, Hero Motocorp, Servotech Power are likely to benefit.
The government is likely to announce a cut in CNG excise duty with Maruti Suzuki and Tata Motors shares coming into focus post such an announcement.
Cement
The FM may announce an increase in budget allocation to PMAY scheme to building additional 20 million rural houses over and above the 10th June Cabinet decision to build 30 million homes for urban and rural poor over next 5 years. UltraTech Cement, Ambuja Cements and Dalmia Bharat shares will be affected by such a move.
FMCG
The government is likely to announce a tax cut, expansion in tax slab or an increase in limit for tax-saving investments under Sec 80C would raise disposable income. Dabur, HUL, Godrej Consumer, Nestle shares will be affected.
The government may raise Excise Duty or NCCD duty on cigarettes and tobacco products. The shares of ITC & Godfrey Phillip will be adversely affected post such an announcement, said the brokerage.
Industrial
The government is likely to announce a higher allocation for defence capital expenditure. Bharat Electronics and Hindustan Aeronautics shares will be positively affected. An announcement on higher capital spending on Railways Infrastructure will impact RVNL, Titagarh Rail System, IRCON and BEML shares.
Infrastructure
The government is likely to announce an increase in infrastructure capital outlay and stocks such as KNR Construction, PNC Infratech , RITES, Ahluwalia Contracts will be positively affected.
The FM may announce a dedicated larger allocation to large water projects like Jal Jeevan Mission, Nal Se Jal and Inland Waterways Development. Shares such as NCC, VA Tech Wabag, Finolex Industries, Ratnamani Metals and Welspun Corp will affected post such a move.
Oil & Gas
The government is likely to announce a policy framework to boost gas consumption in India - gas under GST, likely subsidy for domestic PNG for low income group people and potential cut in excise duty on CNG. IGL, MGL, Gujarat Gas and GAIL shares will be affected.
The FM may also give clarity on gradually ending windfall tax on crude oil and export tax on petroleum products. ONGC, Oil India, IOCL, BPCL and HPCL shares will be affected after the announcement.
Any move on asset monetisation of gas pipelines will affect shares of GAIL, IOCL, BPCL and HPCL.
The government is likely to announce potential incentives for clean energy like green hydrogen and CGB. RIL, GAIL, IOCL, BPCL, HPCL shares will be affected post the announcement.
Power Utilities
Sitharaman may announce enhanced incentives for renewable energy given 500 GW target by 2030. This could include higher viability gap funding for areas like battery storage, offshore wind plants, and solar energy, said the brokerage. Power generation companies such as NTPC, Tata Power, JSW Energy, Adani Power and CESC will be in focus. Also stocks of power ancillaries such as Suzlon, Inox Wind and Sterling & Wilson will be affected.
Any step on prioritizing rooftop solarisation will lead to a positive movement in stocks such as Tata Power, Borosil Renewable and Waaree Renewables.
The government’s enhanced focus on transmission & distribution will be capex positive and Power Grid shares will be positively affected post such a move.
Pharma & Healthcare
The Budget may see higher allocation to the Promotion of Research & Innovation Programme (PRIP) scheme. Lupin, Cipla, Sun Pharma and Aurobindo Pharma will be likely gainers.
Any step on higher tax deduction limits on health insurance will positively affect shares such as Lupin, Cipla, Sun Pharma, Healthcare Global Enterprises.
Real Estate
The FM is likely to announce regulatory incentives for building Data Centre as well as to list REITs. DLF, Anant Raj and Prestige stocks will be benefited.