Union Budget 2024 kept its focus on growth, with an emphasis on infrastructure enhancement, fiscal prudence, and welfare schemes for rural India, while the increase in capital gains tax rates and hike in STT (Securities Transaction Tax) are the immediate concerns.
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“The Finance Minister has set the stage for a ‘developed India’ through broad-based growth of the Indian economy, with an emphasis on infrastructure enhancement, fiscal prudence, and welfare schemes for rural India. The focus is on inclusive growth, highlighting four key pillars: youth, women, the poor, and farmers. The government’s commitment to fiscal prudence is an important signal for the markets, even as allocations for rural and welfare schemes are increased.”
“However, the Union Budget poses short-term challenges for the markets. The increase in capital gains tax rates and the rise in STT are immediate concerns. Additionally, the removal of indexation benefits on LTCG (long-term capital gains) for real estate is disappointing and affects long-term returns. Both LTCG for equity investments and real estate are now set at 12.5%, establishing parity between these two major asset classes,” Axis Securities added.
The brokerage firm observed that the government’s focus on roads, power, urban development, and railways will drive significant long-term economic multipliers.
Axis said the Budget’s emphasis on rural development and agriculture and allied activities, with total outlays of ₹2.65 lakh crore and ₹1.52 lakh crore, respectively, is likely to benefit sectors such as auto, FMCG, fertilizer, and other rural-oriented industries.
Additionally, the budget will indirectly support the rural sector through infrastructure improvements, tourism, fisheries, and skill development initiatives.
Among stocks in its coverage area, Axis Securities is positive on UltraTech Cement, Hindustan Unilever (HUL), ITC, Hero MotoCorp, NTPC, Inox Wind, Indian Hotels, GR Infra and KIMS, in view of the budgetary announcements.
The brokerage firm is also positive on Mahindra and Mahindra, VA Tech Wabag, NCC, Exide industries, and Gravita India but these stocks are not under its coverage.
Sector-wise picks
Axis Securities is positive about the following stocks from various sectors:
Cement
From the cement space, Axis is positive on UltraTech Cement, Ambuja Cement, JK Cement, Birla Corp, Dalmia Bharat, and JK Lakshmi are the preferred cement stocks f Axis Securities.
Infra
PNC Infratech, GR Infra, HG Infra and KNR Constructions, J Kumar Infra and Ahluwalia Contracts are the favourite infra stocks of Axis Securities. NCC is also a favourite stock in this sector, but it is not under the coverage of Axis Sec.
In the urban infrastructure development segment, Axis is positive on Va Tech Wabag, as it is involved in water treatment, desalination, wastewater treatment, water reclamation and sludge treatment projects.
Axis is also positive on municipal waste management companies like Anthony Waste Management.
Auto
From the auto space, Axis is positive on Mahindra and Mahindra, Escorts Kubota, VST Tillers Tractors, Hero MotoCorp, Action Construction Equipment, Amara Raja Energy and Exide Industries.
FMCG
The focus on rural growth, the revision in the new tax regime and measures to increase rural income are positive for major FMCG companies, with more growth driven from rural regions – Hindustan Unilever, Dabur, Nestle, Britannia, Jyothy Labs, Emami, said Axis Securities.
Axis is also positive on cigarette manufacturing companies such as ITC, Godfrey Phillip, VST Industries.
Metals & mining
The Budget’s focus on infrastructure development will support the metals and mining sector.
Axis pointed out that higher budgetary allocation towards construction and infrastructure, which constitutes 60 per cent of steel demand, will augur well for metal and steel companies.
The reduction in BCD on Ferro-Nickel will support stainless steel manufacturers, such as Jindal Stainless. The reduction in customs duty on gold and silver will benefit end-user industries, including jewellery stocks like Titan, Axis said.
The Budget announced the Critical Mineral Mission, which will focus on enhancing domestic production, promoting the recycling of critical minerals, and facilitating the overseas acquisition of critical mineral assets. This will benefit stocks, such as Gravita India, Axis said.
Fertilizers and chemicals
Axis is positive on Deepak Fertilizers and Petrochemicals as the import of ammonium nitrate may be costlier as the basic customs duty on ammonium nitrate is set to increase from 7.5 per cent to 10 per cent.
Axis is also positive on Neogen & Himadri, anticipating an increase in demand for batteries and battery chemicals.
Financials
Axis is positive about the entire banking space and affordable housing finance companies.
Among the banking stocks, ICICI Bank, SBI, Bank of Baroda and Federal Bank are Axis Sec’s preferred picks.
Utilities and power ancillaries
Due to PM Surya Ghar Muft Bijli Yojana and taxation relief on capital goods, Axis is positive on solar power and EPC stocks, such as Borosil Renewables, Sterling & Wilson Renewable Energy Limited, KPI Green Energy and JSW Energy.
The brokerage firm is also positive for energy stocks, such as NTPC, BHEL and CESC.
Real estate
Axis is positive on large real estate players such as Godrej Properties, Prestige Estates who might benefit due to upcoming mid-segment and affordable housing projects as well as rental projects.
The brokerage firm is also positive on Arvind Smartspaces and Man Infraconstructions.
Pharma
Axis is positive on Medanta, Healthcare Global Enterprises (HCG) and KIMS. The brokerage firm is also positive on API manufacturers such as Aurobindo, DR Reddy, CIPLA, Aarti Drugs, and Granules India.
Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not neal bhai. We advise investors to consult certified experts before making any investment decisions.
