Infrastructure, rural development, and healthcare stocks are among analysts' top picks as the Indian government prepares to increase spending in a budget earmarked for seed investment to boost growth.
Construction spending, including roads and ports, as well as incentives for electric mobility and renewable energy, is likely to be a central theme in Finance Minister Nirmala Sitharaman's budget speech on Tuesday, as budget makers Politicians look for ways to help the economy out of the remaining crisis of the epidemic.
With India's stock index plummeting amid the recent global sell-off triggered by concerns about impending interest rate hikes by the Federal Reserve and foreign money fleeing the market, investors expect the announcements budgets to bring some relief.
However, the S&P BSE Sensex has risen in the month following Budget Day in only three of the last eight years since Prime Minister Narendra Modi took office in 2014. It has fallen or traded in a limited range in the five other times.
"The budget's overall focus is likely to be on job creation and investment-led growth, implying encouraging momentum for infrastructure development," Neeraj Chadawar, head of quantitative equity research at Equities, wrote in a note. Axis Securities Ltd. Includes public infrastructure spending on roads, water, metro, rail, defense, digital infrastructure, and green technologies.”
A measure of India's 30 largest companies in the fields of road, air, port, shipping, rail, and other utilities rose 36% in 2021, their best increase since 2009, as the government continues to unlock the public spending to create and boost jobs. . increase. ICICI Direct expects privatization to remain "float" with increased spending on roads, defense, water, housing, and railways.
Top picks include Polycab India, HG Infra Engineering, KNR Constructions, PNC Infratech, Larsen & Toubro, Thermax, KEI Industries, ABB India, Siemens India, Ramco Cement, UltraTech Cement, ACC, Ambuja, Bharat Dynamics, Bharat Electronics, NTPC, the Indian container company.
In line with the government's focus on reducing emissions and reliance on fossil fuels, analysts expect a wide range of support to develop infrastructure for electric vehicles and green power generation.
"A trend towards sustainable technologies is expected with some benefits aimed at accelerating the adoption of electric vehicles in India. In addition, the electric vehicle charging infrastructure sector is expected to receive a boost to support further adoption of electric vehicles," Axis's Chadwar said…
Top choices include Maruti Suzuki India, Tata Power, Adani Green, Hero Motocorp, Bajaj Auto, TVS Motors, Mahindra & Mahindra, Tata Motors, Minda Corporation, Gabriel India, and Dixon Technologies.
Sell-side analysts expect continued support for agriculture and rural areas through more aid for food processing, production-related incentives, as well as increased farm loans, fertilizer subsidies, and crop protection. Increased spending in the agricultural industry will benefit consumer goods companies struggling with rising input costs.
“Given the context of rising Covid cases, we believe policymakers will need to strike a balance between boosting rural demand and investing in infrastructure while continuing down the path of fiscal consolidation to maintain macro stability,” Goldman Sachs (India) said. ) Securities Pvt. Analysts led by Santano Sengupta wrote in a note.
Top choices include PI Industries, Dhanuka Agritech, Rallis, Godrej Agrovet, Hindustan Unilever, Britannia, Dabur, and Nestlé India.
Continuing its focus on strengthening health care infrastructure, the government is expected to increase spending on businesses to boost production, as well as a tax break for people who buy health insurance, better access to care, and a generous payment for drug research.
The best options include Apollo Hospitals, Narayana Healthcare and Shalby Ltd. Gland Pharma, Krishna Institute of Medical Sciences, Healthcare Global Enterprise, Max Health, HDFC Life, SBI Life, and most drug manufacturers
Note: The brokers surveyed for the top industry picks are: Axis Securities and Religare Broking Ltd. ICICI Securities Ltd. and BofA Securities.
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