Decoding budget 2024: Unpacking key sectors and investment opportunities

Budget 2024-2025

In the recent Interim Budget announcements, significant financial highlights include the launch of solar power schemes, providing potential annual savings of Rs 15,000-18,000 per household with rooftop solar panels. The government aims to enable 1 crore households to receive 300 units per month for free.

In the housing sector, the PM Awas Yojana Grameen is close to achieving its target of 3 crore homes, with an additional 2 crore homes planned to meet growing demand. Ayushman Bharat is set to cover all workers under the ASHA and Anganwadi schemes, and a new scheme is proposed to assist middle-class individuals in rented houses or slums to buy or build their own homes, signalling positive prospects for the steel, cement, and building material sectors. A corpus of Rs 1 lakh crore will be established with 50-year interest-free loans for sunrise domains.

The rail infrastructure is set to expand with more than two corridors under the Dedicated Freight Corridor (DFC) and the addition of three rail corridors for energy, cement, and minerals. Approximately 40,000 rail bogies will be converted to Vande Bharat standards.

The government plans to establish more medical colleges using existing hospital infrastructure, and a committee will be set up for recommendations. States will be encouraged to develop tourist centres with long-term interest-free loans. The expansion of more metro trains and Namo Bharat trains to additional cities is also on the agenda.

Key Highlights

1. In the Infrastructure, Cement, and Building Materials sector, a notable 11.1% increase in capital expenditure outlay for FY25, totalling Rs 11.11 lakh crore, promises opportunities for companies like L&T, PNC Infratech, Ultratech, Shree Cement, HCC and Astral. However, the Pradhan Mantri Gram Sadak Yojana witnessed a 36.8% decline to Rs. 12,000 crore.
2. The Banking sector stands to benefit from a lower-than-budgeted fiscal deficit, positively impacting bond yields and translating to higher treasury gains for PSU banks like Union Bank, PNB, SBI, IDBI bank and Bank of India.
3. Housing Finance companies like LIC Housing Finance and Can Fin Homes are poised for positive outcomes with the proposed construction of two crore houses under PM Awas Yojana (Grameen) and the launch of a scheme aiding middle-class individuals in housing needs.
4. Travel, Tourism & Hotels sector sees encouragement for the comprehensive development of iconic tourist centres, favouring companies such as Indian Hotels Company, Lemon Tree Hotels, and Thomas Cook India.
5. Power and Energy sector beneficiaries, including Tata Power, Suzlon Energy, Inox Wind, Coal India, BHEL, and GAIL, are set to gain from initiatives like rooftop solarisation, viability gap funding for offshore wind, and the establishment of coal gasification & liquefaction capacity.
6. In Agri & Fertilizer, the expansion of nano DAP application benefits companies like Kaveri Seeds and Coromandel International. These sectoral insights provide investors with a roadmap to navigate potential opportunities post the interim budget.

Conclusion

The Interim Budget for 2024-25 demonstrates a commitment to fiscal responsibility and economic prudence. The set fiscal deficit target of 5.1% and reduced government borrowing underscore a disciplined approach to financial management. The notable 17% increase in infrastructure spending signals a prioritisation of long-term economic growth over short-term populist measures. The positive response from bond markets, with easing yields, reflects confidence in the government’s fiscal strategy.

Crucially, the budget’s emphasis on quality expenditures and the continuation of existing policies contribute to overall economic stability. This prudent fiscal stance is anticipated to have a favourable impact on equity markets, particularly in sectors like capital, capex, and consumer industries. The advised focus on pharmaceuticals, IT, and PSU banking stocks further aligns with the government’s vision for sustained economic growth in 2024. Overall, the Interim Budget sets a positive tone for economic prospects, encouraging strategic investments and fostering investor confidence.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.