In the FY23 budget, the government has tried its best to strike a balance between fiscal discipline and growth. Bond yields rose amid concerns over the government’s readiness to take on bigger debt. Jefferies has said in one of its reports that rising bond yields are negative for the equity market. Especially NBFC stocks can get a setback. On the other hand, capital goods, cement and pipe companies can benefit from the budget announcements.
Jefferies has given investment advice on these stocks and sectors after the budget. Let’s take a look at them
Capex/ Infra: AIn the coming budget, the government has announced a 15 percent increase in capital expenditure on an annual basis. This announcement of the budget is positive for L&T and other companies related to this sector. Along with this, it has been said to give infrastructure status to the data centers so that they can get tax holiday. Companies like Siemens, ABB will also benefit from these announcements of the budget. Apart from this, in the budget that came yesterday, an increase of 10 percent has been announced on an annual basis in the expenditure on defense. Bharat Electronics and L&T will benefit from this announcement.
Jan Auto Sales| Sales of Maruti Suzuki, Bajaj Auto and TVS Motors remained sluggish, M&M sales boom
ITC (Positive)No tax has been imposed on tobacco and cigarettes in the Union Budget which came yesterday. Apart from this, there has also been a good increase in GST tax collection in January. This news is positive for this stock.
Titan (positive)Reduction in custom duty on cut and polished diamonds has also been announced. Now this duty has been reduced from 7.5% to 5%. This news is positive news for Titan. Due to this news, there was a strong rally in this stock yesterday.
pipe companies Supreme, Astral, and Finolex Industries will be benefited by the announcement of a 35 percent increase in allocation of the scheme to supply pure water to households through pipes.
RIL: Reliance will benefit from the expansion of the PLI scheme for solar cell manufacturing.
Financials: In the budget that came yesterday, many announcements have been made for the financial sector as well. The ECLG scheme for this sector has been extended till March 2023. This announcement is mildly positive for the financial sector. Apart from this, the announcement of increase in capital expenditure will also create good opportunities for the banking sector.
Jefferies has said in this note that if we look at the negative aspects of the budget that came yesterday, then the government’s program to take more debt than expected and there is no big announcement to attract foreign investment in the country is a negative factor. This may lead to further increase in bond yields which will be more harmful for PSU banks and Kotak Bank. Apart from this, NBFC companies will also be under pressure.
,