The countdown to Budget 2022 has begun and India is in the midst of resurgence in coronavirus cases driven by the new Omicron variant. While this pose downside risks to the economic growth, the impact isn’t expected to be significant. Nonetheless, contact-intensive sectors, travel, tourism and hospitality sectors have been time and again hit by the pandemic’s onslaught. Besides, private consumption is yet to come to pre-Covid levels which underscore stressed household incomes. Data provided by CMIE – or Centre for Monitoring Indian Economy – suggests that stress is more in lower tier and rural households where consumption to income ratio is generally higher. Given this, the Street expects Finance Minister Nirmala Sitharaman to dole out fiscal measures to increase disposable incomes of people at the bottom of the pyramid. On the tax front, D-Street experts don’t expect any change in tax slabs. However, media reports suggest that the Centre could increase the standard deduction limit, which currently is at Rs 50,000 available to salaried taxpayers and pensioners by 30-35%.
So, how can market investors benefit from this? Yesterday, the BSE Sensex fell 634 points, taking its three-day slide’s tally to over 1,800 points. The NSE Nifty, on the other hand, ended just above the 17,750-mark yesterday. Given this, analysts suggest inventors accumulate quality names from the space which can benefit from the Budget. When asked to pick stocks that may benefit post Budget, G Chokkalingam, founder and chief investment officer at Equinomics Research went with the FMCG pack. For AK Prabhakar, who is head of research at IDBI Capital, quality stocks from defence, agriculture, and capex should be looked at ahead of Budget 2022. That apart, markets also expect the govt to focus on electric mobility, 5G technology and increasing allocation to healthcare sector. Given this, investors may look atlarge-caps like L&T, M&M, Sun Pharma, and Bharti Airtel which have an upside potential of 11-15% from current levels. Coming to Friday’s session, global cues such as bond yield movement, oil prices, and FII activity will be the key market movers. Back home, Q3 earnings of RIL, HDFC Life, Vodafone Idea, PVR, and SBI Life will be keenly tracked by market participants.
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