Top 5 sectors to watch out for in FY2022: Since the Budget 2021, the Indian stock markets have seen a strong boom. The stock market has jumped more than 9 percent in the last one week. The Nifty has also touched the level of 15 thousand. In such a situation, the important question is that when the market is making new records, is it a great opportunity to invest in the market, or is it right to wait now? Or say, which sectors should investors keep an eye on? Experts believe that looking at the squeeze of Budget 2021, it is clear that the basic focus of the budget is Infrastructure and Healthcare sector. Therefore, there can be growth in these sectors. Apart from this, there are some sectors in which the boom is expected, such as automobile sector can perform well after the announcement of scrap policy.
Jyoti Roy, DVP-Equity Strategist at Angel Broking Ltd, says that after the budget, an economic roadmap has come before us for a year. The government surprised everyone with a fiscal deficit target of 9.5% as it was important to revive growth. Its market was seen on the capital market and the market touched a new all-time high. Investor should keep an eye on 5 sectors in the financial year 2022 after the budget. These include Automobile, Pharma, BFCI, Manufacturing and Gold and Gems.
Auto sector will get support through scrap policy!
Jyoti Roy says that the automobile sector is completely dependent on physical procurement. Hence it has been one of the most affected areas during the COVID epidemic. In the budget, the Finance Minister announced the awaited voluntary scrap policy. It was long awaited. This policy will encourage people and companies to scrap their 15 to 20 year old vehicles and buy new ones. This will also benefit OEM (Original Equipment Manufacturer) and Electric Vehicle Manufacturers in the country. Commercial vehicles will undergo fitness test after 15 years and private vehicles after 20 years.
Roy says that another important initiative is about the Urban Infrastructure Scheme. Innovative PPP models will empower private sector companies to finance, acquire, operate and maintain more than 20,000 buses. This will give a boost to Indian bus manufacturers. Custom duty has been increased from 7.5% and 10% to 15% on certain auto parts such as ignition wiring sets, some parts of signaling equipment, safety glass, and so on. Auto ancillary companies will benefit from it.
How important is the BFSI sector?
Jyoti Roy says the government will recapitalize Rs 20,000 crore to strengthen the financial position of public sector banks. This will improve the balance sheet of public sector banks. The existing loan will also be transferred to a new bad bank through Asset Reconstruction Company (ARC) and Asset Management Company (AMC). This is another good initiative for public sector banks. This will reduce the problem of stressed assets. Housing finance companies (HFCs) will get the benefit of tax holiday for affordable housing. It will also add real estate companies working in affordable housing sector.
Pharma sector a big game changer!
Roy says, the Finance Minister has announced an expenditure of 64,180 crores in the next 6 years to strengthen the healthcare system in the budget. This will open new institutions and strengthen existing healthcare institutes. Budget spending for health and wellness has also increased by 137 percent. It was Rs 94,452 crore in FY 2021, while in 2022 it has been increased to Rs 2,23,846 crore. Rs 35,000 crore has been allocated for the COVID-19 vaccine in FY 2022. This will benefit vaccine manufacturers. This expense is likely to increase further.
Manufacturing: Benefits of Custom Duty Manipulation?
Roy says, the government is preparing to spend 1.97 lakh crore on various PLI schemes in the next 5 years. This expenditure is in addition to the 40,951 crore PLI scheme announced for the electronics sector. This will benefit Indian manufacturers. Custom duty has also been increased on specific inputs, parts or sub-parts of mobile phones, including printed circuit board assemblies (PCBAs), camera modules, and connectors. Indian mobile manufacturing companies will benefit from this.
How special will gold and diamond be
According to Roy, the customs duty on gold and silver has been reduced from 12.5% to 7.5%. However, the duty has now been increased from 7.5% to 15% for synthetic cut and polished stones (gemstones). 2.5% Agriculture Infrastructure and Development Cess is also implemented on Gold, Silver and Door bars. The net effect of these steps will be positive on jewelery companies. Indian gems and jewelery companies are also in a state of profit.
Roy says that investors can focus on these areas and take their positions according to their investment goals and risk appetite. Some other segments and sub-segments that you can look forward to include real estate, cement, infrastructure, city gas distribution, power, insurance and household appliances.
(Disclaimer: Investing in stock market is subject to risks. Business Khabar Online does not recommend any type of investment. Investigate yourself before investing or seek the help of your financial advisor.)
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