Undoubtedly the impact of the Union Budget on the stock market has reduced notably over the past few years with the government undertaking most of the reforms outside the purview of the Budget. The bar is even lower this time as it is not a full Budget and therefore the impact on Sensex, Nifty may be limited to just one day.

But if you look beyond the headline indices, February 1 could turn out to be a D-Day for a lot of stocks as the Modi government is likely to keep Centre’s budget tilted towards capex spend from budgetary resources.

Capital allocation on road infrastructure is likely to be high in addition to expenditure on capital goods, infrastructure, manufacturing, automobile, healthcare and financial services. Stocks related to railways, infra, capital goods and defence would be in focus.

“The budget is likely to maintain a focus on infrastructure development activities, particularly in roads and construction. This emphasis is expected to contribute to robust performance in the infrastructure sector and benefit building-material segments such as cement, tiles, and others. Real estate, being a key sector, is anticipated to receive additional support, with potential government schemes particularly directed towards the affordable housing segment. Additionally, a further push is expected for railway infrastructure development,” said Neeraj Chadawar of Axis Securities.

Defence stocks

Indigenisation of defence and defence exports may receive a push in the Budget as defence capex may focus on R&D, UAV/drones, anti-drone systems, etc. Defence stocks in the watchlist include Cochin Shipyard, GRSE, Mazagon Dock, HAL, BEL, BHEL, Mishra Dhatu Nigam, Paras Defence and Bharat Dynamics.

Rail stocks

Railways capex is expected to further elevate to 20%+ growth YoY led by further expansion of DFC, rolling stock, HSR networks, etc as outlined in National Rail Plan, Nuvama said. Rail stocks in focus include RITES, Ircon, Jupiter Wagons, Titagarh Rail, IRFC, RVNL and RailTel.

Infrastructure stocks

Axis expects the capital outlay on the infrastructure sector to witness a healthy increment in the Union Budget 2024-25 to achieve the target set under the National Infrastructure Pipeline and Gati Shakti Master Plan. Companies operating in highways, railways, and urbaninfrastructure is poised to encounter massive opportunities. Stocks in focus include KNR Construction, PNC Infratech, RITES, KEC International and Ahluwalia Contracts.

Auto stocks

Any support to rural consumption would benefit rural-focused two-wheelers and entry-level four-wheeler OEMs, along with auto ancillary companies supplying to such OEMs. Top stocks under the lens include Maruti Suzuki India, Uno Minda, TVS Motors, Hero Motocorp, Minda Corp, Tata Motors, Sansera Engineering and Fiem Industries

Power stocks

Announcements towards renewable energy capital expenditure, including incentives for green initiatives and PLIs for module manufacturing, capital expenditure towards battery storage infrastructure, a reduction in customs duty on solar cells from 25% to 5%, and an extension of the ISTS waiver for renewable projects commissioned beyond June 2025, are some of the key expectations from the upcoming budget.

The Suryodaya Yojna is also positive for the entire rooftop solar value chain. Watchlist stocks include Tata Power, KPI Green, Borosil Renewables, Adani Green, NTPC, NHPC, Waree Renewable and Gensol Engineering.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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