Top Sectors to Watch this Union Budget Season

While it's an interim budget, traders and investors are optimistic anticipating populist announcements as the 2024 parliamentary elections draw near. On 1 February, Union Finance Minister Nirmala Sitharaman will present the budget for the sixth consecutive time.

Before the interim budget investors are focusing on different industries. Here are some sectors to watch:

Real Estate

In the fiscal year 2023-24, real estate sector demonstrated resilience with sales almost reaching 90% of pre-COVID levels in certain cities. This sector is expected to be a focal point in the upcoming budget. Anticipated announcements include an increase in home loan interest rebates, revisions in GST input tax credit rules and adjustments in the upper threshold limit for affordable housing. These measures aim to attract genuine homebuyers and stimulate housing demand.

Stocks to watch: Macrotech Developers, DLF Ltd, Godrej Properties, Oberoi Realty, Prestige Estates Projects etc

Consumption

Consumption sector is another crucial area to monitor. In light of the upcoming elections, the government may introduce populist measures such as lower tax rates and increased allocations for schemes like PM Kisan and MNREGA. These measures could boost monthly disposable income, indirectly supporting the consumption sector. The retail industry anticipates growth oriented measures, including supportive policies, simplified regulations and GST norms to foster its development.

Stocks to watch: Hindustan Unilever, Avenue Supermarts, Godrej Consumer, Asian Paints, Havells India, Hero MotoCorp, Bajaj Auto etc

Infrastructure

Infrastructure sector, covering railways, highways, ports, airports, and more, has seen substantial budget allocation growth in the past. Infrastructure capex increased to ₹10 lakh crore, a 33% rise in the previous budget. This year's interim budget may emphasize fostering economic growth through increased capital investment (capex) in segments like highways, railways and urban infrastructure. Railways may witness a rise in capex for network expansion, high speed rail network expansion and the launch of more Vande Bharat trains. The road and highway ministry could see a double digit increase in capex allocation due to the government's heightened focus on highway and urban infrastructure development.

Stocks to watch:  Rites, Indian Railway Finance Corporation, Jupiter Wagons, Rail Vikas Nigam, Titagarh Wagons, L&T, HG Infra Engineering, IRB Infrastructure Developers, PNC Infratech and others.

It's essential to keep an eye on these sectors and related stocks as the interim budget unfolds.