Top 5 sectors to invest after budget allocation

There are all efforts in Union Budget 2018 to appease rural and EWS population but at the same time Government tried to maintain the fiscal discipline by keeping fiscal deficit target at 3.5% and 3.2% for FY18E and FY19E, respectively.

Although deficit targets are higher as compared to previous estimates but considering surge in prices of crude oil, these are respectable numbers.

Higher than estimated expenses and lower than expected revenue on account of lower GST collection and no spectrum auctions lead to miss on fiscal deficit targets.

Budget speech has talked about total expenses from all agencies at Rs.14 lac crore towards aiding rural economy/farmers’ income.

Here are the top 5 sectors to invest after budget allocation

Rural Spending:

This will have a far-reaching impact on growth rates of country and reduction of income gaps in society. Companies and sectors deriving the majority of revenues from the rural economy like 2 wheelers, FMCG Companies, fertilizer companies will benefit from the push to rural spending. Positive for HUL, Hero Motocorp, ITC, Godrej Agrovet to benefit from the move.

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Infrastructure:

Budget 2018 continued to put a strong focus on infrastructure development, which is in line with the expectations. FM has allocated extra-budgetary support of Rs. 5.97 lakh crore v/s Rs. 3.96 lakh crore in the last budget for the infrastructure sector, which is encouraging as India needs a significant amount of investment in infrastructure due to growing needs.

Higher allocation in infrastructure segment will essentially expedite infrastructure development in the country, which in turn will aid many industries, i.e. metals, cement, building materials, etc.

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Construction companies like KNR Construction, J Kumar, NCC to play infrastructure theme from the budget. Positive for cement companies like JK Cement and Sagar Cement to benefit from push to infra.

Healthcare:

Union budget has also proposed coverage of Rs. 5 Lac per household to total 10 Cr households for hospitalization. The move will benefit hospital chains like Apollo Hospitals and Narayana Hrudyalay.

It will also have a positive impact on companies like Thyrocare and Dr. Lal Path Labs. Insurance companies will also benefit because of insurance premium received towards coverage of families.

Affordable Housing:

Among other major initiatives budget has proposed the creation of affordable housing fund under NHB. This will benefit all affordable housing players like Mahindra Lifespace, Ashiana Housing, etc.

It will also have a positive impact on affordable housing financiers like Gruh Finance, DHFL, and Can Fin Homes.

Tyres:

Within tax proposals, the budget has proposed to increase customs duty on imported Truck and Bus Radials from 10-15 percent, which will benefit companies like Apollo Tyres and JK Tyres who have significant exposure towards truck tyres.

 

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