Interim Budget provides fiscal stimulus of close one trillion rupees through direct cash benefits to small & marginal farmers and tax sops for the middle class.
Impact of Budget on Indian Indices
We strongly believe that his budget is middle class and farmers oriented budget. Finance Minister clearly target middle income class and farmers to get benefit of their vote in the upcoming general election. No income-tax up to 5 lakh earnings is a big boost for this earning group. 6000 thousand Rs. for farmers which have 2 hectare land. it could affect in long term. Market reacts to the fiscal policies taken by govt. in this budget. Indices can drag in short term but at the end market is reacting positively in the hope of re-elected this government. In the coming months we believe indices could touch new highs.
CNX Nifty which is around 10900 level, If breaks the upper range of 11000 it can easily moved up to 11200 level where it could face resistance. it also depends on US and other markets sentiment. In the near short term buying on dips will be the strategy. However on the bottom side if nifty breaks 10600 level we could easily see 10500-10400.
Stocks that are likely to get benefited post budget
Post budget, stocks that are hot and have to invest in are DABUR, HINUNILVER, MARICO, TVS MOTOR, HERO HONDA, BAJAJAUTO, JUBILANTFOOD these stocks are consumer oriented stocks which are biggest beneficiary from extended tax slab of 5 lakh given by finance minster. One thing that we mentioned here is that two wheeler segments get benefited by budget due to middle class tax relief, but not as much as good for four wheeler segment because of tax slab unchanged on upper side i.e. above 5.00 lakh. On the other hand Real Estate Sector is also benefited by this budget hence the finance minister, given boost to affordable housing projects, Companies that develop Affordable housing are DLF, Soba Developers, Parshvnath Developers etc. and companies that give finance to these projects and housing finance companies get benefited from this budget.
Stocks that are likely to get negatively impacted
Stocks and sectors that are losers or not much participating post budget are Banking, finance, and Pharmacy & IT. Finance minister event not touch LTCG and STT's in budget. Stocks that are awaiting for changed in LTCG and STT's are GEOJIT, Edelweiss, IIFL, these stocks are not getting what they are expecting. NBFC's are also not benefited, stocks like DHFL, Bharatfin, bajajfinance, m&m finance are expecting a stimulus in current scenario where they got hammered because of their liquidity problem.