Stage set for $5tn economy: Top 21 stocks that are likely to benefit from Budget 2019
Finance Minister Nirmala Sitharaman on July 5 presenting the Union Budget laid the foundation to build India a $5 trillion economy in the next few years.
Amid an economic slowdown, rural distress, falling demand and unemployment, a big package for infrastructure will certainly prove to be a shot in the arm. At the same time, the proposal to reduce the fiscal deficit to 3.3 percent of GDP to 3.3 percent from 3.4 percent is a welcome move.
“The Union Budget for FY20 was clearly a strategic budget with the emphasis placed on maintaining the long-term goals of fiscal consolidation and infrastructure creation,” B Gopkumar, ED & CEO at Reliance Securities told Moneycontrol.
The Budget also had plenty for the markets. “Moves such as government’s commitment to restrict fiscal deficit to 3.3 percent of GDP, opting for partial external borrowings, divesting stake in PSUs and recapitalising PSU banks and easing the liquidity stress for quality NBFCs sound comforting,” Sharekhan said in a note.
“The progressive and inclusive intent of the government is quite heartening and the roadmap turning India into a $5 trillion economy in next few years looks promising,” the note added.
Here are 21 stocks that are likely to benefit the most from the proposals presented in Budget 2019:
Analyst: Umesh Mehta, Head of Research, SAMCO Securities
Cochin Shipyard and Adani Ports:
The government has emphasized linking inland waterways and increasing the number of cargo terminals to expedite the number of goods transported through water.
This could positively impact Cochin Shipyard as they build ships and vessels and as more and more businesses use this route of transport, Cochin Shipyard could benefit from increased vessel orders and repairs.
This may also impact port operators and logistics players such as Adani Ports if more businesses use the water route as a mode of transport.
Since it houses retail business, doubling of farmer income and an increase in purchasing power parity of Indian Consumers will have a direct impact on RIL.
Government’s doubling of farm income will involve several government plans and participation of the private sector. Being India’s largest FMCG company, ITC can benefit immensely by PPP with the agriculture sector of India.
The is planning 100 percent FDI in insurance intermediaries sector to boost penetration. The sector has a lot of tailwinds playing to its benefit.
Larsen & Toubro:
As the government embarks on linking waterways, bigger roads and better water management systems, this complete infrastructure services company stands will benefit immensely.
State Bank of India:
With the bank recapitalisation, rejuvenation of the banking system and resolution of NPAs, this banking PSU, which is the country’s biggest and most efficient will benefit.
Analyst: Jayant Manglik, President – Retail Distribution, Religare Broking Ltd
SBI, Bank of Baroda, Bank of India:
The government’s move to allocate Rs 70,000 crore for the recapitalisation of PSBs is encouraging, as it would hand in more capital for PSU banks that aid them for better credit growth and comply with RBI capital requirement guidelines.
The step is positive for banks like SBI, BOB, and Bank of India.
HDFC, LIC Housing and GIC Housing:
The government has proposed to move regulation of HFCs from National Housing Board to RBI, which would be positive for housing finance companies like HDFC, LIC housing finance, GIC housing, etc. as it would improve stability in the sector in the long term.
Infra Boost: L&T, Ashok Buildcon, Gayatri Projects, Sadbhav Engineering and KNR Construction:
Government has announced its intention to invest Rs 100 lakh crore in infrastructure over the next five years. To this end, it is proposed to set up an expert committee to study the current situation relating to long-term finance and our past experience with development finance institutions, and recommend the structure and required flow of funds through development finance institutions.
Prestige Estates, Brigade Enterprise and Ashiana Housing:
Government proposed to allow additional deduction of Rs 1.5 lakh for the interest paid on housing loans over and above current Rs 2 lakh deduction.
This deduction will be allowed for loans borrowed up to March 31, 2020 for purchase of an affordable house valued up to Rs 45 lakh.
This move may aid in the growth of abovementioned stocks.
NBFCs: L&T Finance Holdings & Equitas Holdings
Now deposit-taking NBFCs and systematically important NBFCs are allowed to calculate the tax payable on actual receipts from bad or doubtful debts (bringing them at par with banks and HFCs, currently were paying on an accrual basis).
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