Budget 2016-17: Stocks on radar
Check out how Budget announcements are likely to impact some key stocks.
Archana Khatri Das
New Delhi: The announcements made in the Union Budget always see a positive or negative impact on the stock market.
While some shares surge in tandem with the positive measure aimed at a specific sector, others shed gains made in the past due to a policy announcement considered bearish.
These are the following stocks to watch for, considering what the Finance Minister may announce on February 29:
Infrastructure stocks: The prevailing low oil prices will aid the government to divert a large part of savings towards infrastructure development. Amid global turmoil, government will continue its focus on public investment to drive the economic growth amid weak global economic outlook.
Infrastructure companies like L& T, SAIL, IDFC, Ashoka Buildcon, Tata Steel, Reliance Infra, Va Tech Wabag, IRB Infrastructure Developers, Engineers India Limited etc. are expected to gain from any announcement made in favour of the infrastructure sector.
PSU bank stocks: The balance sheets of public sector banks are under severe stress as a result of higher non-performing assets. Government may allocate more capital infusion into these banks to support their balance sheet.
The revenue allocation for capital infusion is likely to boost PSU banks stocks like SBI, PNB, BOB, Canara Bank, Allahabad Bank, Dena Bank, United Bank etc.
Auto stocks: Government is expected to announce its first scrappage policy. The policy may offer incentives for Indian car-owners to give up old cars for newer and cleaner vehicles. The incentive to buy new vehicles is likely to have a positive impact on the auto sector currently struggling with weak demand.
Auto stocks like Mahindra and Mahindra, Maruti Suzuki, Tata Motors, Hindustan Motors are expected to ain.
Auto component sector is also expected to get boost as government may also offer incentives for development and use of hybrid cars in India.
Metal Scrap and Trading Corporation stock will be the biggest gainer from the governments' scrappage policy. The PSU is already gearing up to for its first-ever scrapping and shedding centre.
Solar stocks: The government is expected to work out a package of incentives for solar power plants having generation capacity of 3,000 MW or more. An announcement regarding this is expected in the Budget on February 29.
Stocks of companies like Solar Industry India, Tata Solar, Pv Tech, Sun Edison, IndoSolar, Moser Baer, Websol, Swelect Energy are expected to gain.
Fertilizer stocks: Finance Minister is expected to announce direct cash transfer of urea subsidies to farmers. The industry has been making representations to the government for direct transfer of subsidy and release of their subsidy arrears.
Fertilizer stocks like Zuari Agro Chemicals, Coromondal Int, Rashtriya Chemicals, Chambal Fertlizers, Deepak Fertilizers etc are expected to post gains.
Pharma Stocks: The Indian pharma industry is on the way to become a global pharma hub, as it is one of the lowest-cost producers of essential drugs globally. The tax breaks given to SEZs and R&D in the Budget 2015 are expected to continue to further drive growth and investment in the sector.