Union Budget 2025: Emkay Global expects a relatively quiet Union Budget this time, with a focus on continuity rather than dramatic change. The brokerage, which is cautious on domestic equities, is 'overweight' on consumer discretionary and healthcare sectors and 'underweight' on financials and staples. Ahead of Budget 2025, its Nifty target for 2025 implies 8 per cent upside over the prevailing level.
"A countercyclical stimulus is unlikely, as it would entail straying from the pre-announced consolidation path. The heavy lifting would have to be done by relaxed lending guidelines and monetary easing further down the line. We expect some sector level changes. Recommended trades: Long EMS, new energy and EVs; avoid life insurance," it said.
Net-net, Emkay sees protectionist moves on select sectors such as steel, some changes in gold customs duty, payout of the LPG subsidy and some progress on the PLI scheme.
Among likely policy announcements, Emkay Global sees removal of old tax regime, leading to end of 80C/80D exemptions. It would be perceived negative for life and health insurance companies such as LIC, SBI Life, HDFC Life, MAX Life, ICICI Prudential Life and Star Health, it said.
A doubling of life insurance Cover under PMJJBY and PMSBY would be sentimental positive for life insurance companies. There are also low chances of removal of 10 (10(D)) exemptions that makes life insurance maturity proceeds tax free and harmonisation of corporate tax rate for life insurers from the current 14.6 per cent, which would be severely negative for insurance players.
Emkay Global said any announcement on offer for sales in PSU banks would be sentimentally positive for stocks such as UCO Bank, Central Bank of India, Indian Overseas Bank and Bank of Maharashtra while any Special Credit Guarantee fund for MFIs would be positive for Bandhan Bank Ltd, CreditAccess Grameen Ltd, Fusion Finance and other MFIs.
In the case of FMCG sector, any reduction in duty for imported palm oil would be positive for players such as Gopal Snacks, Bikaji Foods International Ltd, Britannia Industries, Nestle India, GCPL, Hindustan Unilever Ltd (HUL), Devyani International Ltd and Sapphire Foods India Ltd.
Any increase in customs duty on gold may hit Titan Company Ltd and SENCO Gold. A double-digit hike in excise tax will be negative for cigarette players such as ITC Ltd, while a no hike or a single digit hike would be seen as favourable outcome.
For OMCs, higher LPC subsidy would be positive for BPCL, HPCL and IOC. Any safeguard duty on flat steel would be positive for steelmakers such as Tata Steel, Jindal Steel, SAIL and JSPL.
Any increase in customs duty for Polyethylene Terephthalate (PET) resins would be posituve for companies making PET bottle-grade chips. This would be positive for SRF Ltd. Any increase in customs duty for Polyvinyl Chloride (PVC) would be positive for Chemplast Sanmar.
Any reduction in GST on health insurance or import duty on healthcare equipment would be positive for Max Healthcare, KIMS, Global Health & Rainbow Childrens' hospitals.
Sops on electronic components PLI scheme would be positive for Dixon and Optiemus Infracom. Any guidelines for paving the path toward designing semi-conductors would be positive for CG Power, Kaynes and Dixon. Policy push on green hydrogen would be positive for Reliance Industries Ltd, Larsen & Toubro (L&T) and Thermax Ltd.
Allocations for new tracks is seen rising 50 per cent YoY to Rs 50,000 crore in FY26, aimed at boosting rail logistics share to 45 per cent, Emkay Global said. This would be positive for KEC International Ltd, RVNL Ltd and CG Power Ltd. Any push for renewables including the government’s PM Surya Ghar Yojana would be positive for Premier Energies Ltd and Waaree Energies Ltd.
Meanwhile, EV bus deployment would be positive for Ashok Leyland, Tata Motors, JBM Auto and Olectra Greentech. Any announcement regarding decrease in LTCG tax rate on housing sales and enhancing tax benefit on home loans would be positive for real estate players.