5 mins read . 27 Jan 2023
There are several sectors that are naturally sensitive to the Union Budget announcement. Normally, the discussion on the best stocks for 2023 will start well before the budget as well as the stocks to look out for post budget. The question that investors are asking is; after budget which shares to buy. Obviously, they have to be budget sensitive stocks as that is where you get the real traction
Here we will look out for stocks to buy after budget 2023 based on stock outlook. We also create a bucket list of stocks to look for 2023. As an added incentive, we also keep a watch out for penny stocks that can be multi-bagger in 2023.
Here is a list of 8 sectors and specific stocks that are very budget sensitive.
1) Infrastructure sector has been one of the key sectors that tends to be budget sensitive. Typically, budget allocations have a strong infrastructure content to it. Budget 2023 could have some key announcements pertaining to mega infrastructure project allocations, mega parks and supply chains for various sectors. Data centres could be one of the key areas of focus. Watch for stocks like IRB Infra, NCC and Larsen & Toubro.
2) Railways is one more sector that is likely to be overly sensitive on the Union Budget. With the railway budget being scrapped, allocations for the Railways come from the Union Budget only. Apart from the increased railway capex this year, there are expectations of gauge conversion, orders for wagons and divestments. Stocks to watch are RVNL, Texmaco and BEML.
3) Financials are one more sector that will be closely tracked in this budget. On the PSU banking front, the focus would be on the course of action on banks like Central Bank and how the government reacts to the response to the strategic sale of IDBI Bank. There are also hopes of further divestment announcement in banks like Central Bank and PNB and new rules for enabling smaller NBFCs to participate in co-lending. Focus on Central Bank and Bank of Baroda.
4) Automobiles could be another sector to benefit from the budget. Firstly, there are expectations that the peak GST rate will be cut down from 28% to 18%. Also, the battery swapping policy may be officially announced in the Union Budget to make it meaningful and reduce the cost of upfront ownership of the electrical vehicles. Improvement in rural spending would be positive for tractors and two wheelers. Focus on Bajaj Auto and Mahindra & Mahindra.
5) One sector you cannot miss out is defence. This is likely to be another year of big outlays to defence as well as farming out of more orders to the Indian defence sector. Indigenisation of defence is going to be a huge opportunity for manufacturers in the sector and the government is expected to announce some key measures for indigenisation of defence stocks. Focus would be on BEL, Mazagon Docks and Hindustan Aeronautics Ltd.
6) Finally Renewable energy could be the next big story for the Union Budget, especially with net zero carbon emissions target by 2070. The Indian government plans a focus on energy transition and clean energy is likely to be a major sentiment booster for renewable energy companies. However, one can also expect some incentives for power companies, both in renewables and in thermal. After all, power shortage is the big story that has plagued Indian stocks. NTPC, Tata Power and KEC could be in the news.