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Synopsis: The Union Budget 2024 is expected to emphasize a balance between fiscal responsibility and growth-driven capital expenditure, with significant benefits likely for defense, renewable energy, infrastructure, and FMCG sectors. Key stock picks include Mahindra & Mahindra, Hero MotoCorp, ITC, Reliance Industries, NTPC, and others, while companies like BEL, HAL, Tata Power, Suzlon Energy, and PFC stand to gain from sector-specific allocations and incentives.
As the Union Budget 2024 approaches, several key sectors and companies are poised to benefit from potential government policies and spending increases. Below is an analysis of the sectors and specific stocks that might see positive impacts.
Defense and Infrastructure
The Modi government is expected to strike a balance between fiscal deficit, capital expenditure for growth, and social spending. Higher allocations for defense capital expenditure are likely to benefit Bharat Electronics Limited (BEL) and Hindustan Aeronautics Limited (HAL). Increased capital spending on railway infrastructure could positively impact companies such as Rail Vikas Nigam Limited (RVNL), Titagarh Rail Systems, IRCON International, and Bharat Earth Movers Limited (BEML).
Power and Renewable Energy
With India's ambitious goal of achieving 500 GW of renewable energy by 2030, enhanced incentives for renewable energy are anticipated. Companies like NTPC Limited, Tata Power Company, JSW Energy, Adani Power, and CESC could see benefits from higher viability gap funding for battery storage, offshore wind plants, and solar energy projects. This could also be advantageous for power ancillary companies like Suzlon Energy, Inox Wind, and Sterling & Wilson.
Financial and Rural Economy
The brokerage firm JM Financial highlights that any tax cuts, expansions in tax slabs, or increased limits for tax-saving investments under Section 80C would boost disposable income, which would be favorable for FMCG firms such as Dabur India, Hindustan Unilever (HUL), Godrej Consumer Products, and Nestle India. Conversely, increases in excise duty or NCCD duty on cigarettes and tobacco products could negatively impact ITC and Godfrey Phillips.
Top Stock Picks
JM Financial's top stock picks ahead of the budget include Mahindra & Mahindra Ltd, Hero MotoCorp Ltd, ITC Ltd, Sumitomo Chemical India Ltd, Reliance Industries Ltd, Power Grid Corporation, and NTPC Ltd. Other notable mentions are Sanghvi Movers Ltd, Bharat Electronics Ltd, Bharat Forge, VA Tech Wabag Ltd, Larsen & Toubro Ltd, DLF Ltd, Ambuja Cements Ltd, APL Apollo, PFC, and IRCON International Ltd.
Infrastructure and Construction
A significant budgetary allocation for infrastructure projects like Jal Jeevan Mission, high-speed rail, smart cities, and inland waterways development is expected. This focus should benefit infrastructure companies such as KNR Constructions, PNC Infratech, RITES, KEC International, J Kumar Infraprojects, and Ahluwalia Contracts.
This comprehensive analysis highlights the potential beneficiaries across various sectors as we approach the Union Budget 2024, offering a clear picture for investors to strategize their portfolios accordingly.
