As the Budget 2018, date nears, and investors may be on the lookout for top themes to bet on, top market voices say that rural and infrastructure related stocks could be in focus. “Rural spending as a percentage of GDP has come down below 1% from 1.4% in last 5 years. We could see a boost in rural spending. Push to NREGA, Rural Road, Rural Housing,” Asif Iqbal, Research Head (Equities), Escorts Securities told FE Online in an interview.
Sharing his views ahead of Budget 2018, Inderjeet Bhatia of Macquarie Securities says that Finance Minister Arun Jaitley would have to balance between pushing productive investments like infrastructure and pushing more on either the rural employment guarantee programme or programmes like rural and urban housing projects.
“I still believe spending in the rural areas would be the way forward for the government. I would also expect that other than outside the budget, there could be slightly higher increases in MSP which has been given in the last three-four years in a way to alleviate the rural distress that we are seeing on the ground right now,” Inderjeet Singh Bhatia told in a recent interview to ET Now.
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But, what kind of stocks from the rural and infrastructure space should the investors focus on? “The three themes that I talked about earlier are infra, the rural side and the third is the GST kind of a theme. Within the rural side, the exposures through either the companies which are exposed on the financing side or on the equipment side or even on the broader consumption pattern side may be two wheelers which are more focused on rural side. Those could be a good way to play the entire rural theme,” Inderjeet Bhatia said in the same interview.
The market experts also point out that Infrastructure could see a good boost in the upcoming Union Budget 2018. “Infra boost could be seen through off-budget sources as NHAI, Railways,” Asif Iqbal, Research Head (Equities), Escorts Securities told FE Online.
What stocks should investors focus on from the infrastructure space? “Other than L&T, there is definitely opportunity in some of the midcap names. Nagarjuna Construction is another midcap name that we like. At some point of time, we believe the companies which are more dependent on the private capex cycle will start to see a benefit but it could be a year from or maybe six months from now.”
Finance Minister Arun Jaitley had earlier pointed out that the government has increased its allocation to infrastructure. “In recent time, the government has increased infrastructure spending”, he said, adding the Budget 2017-18 made allocation of Rs 3.96 lakh crore for infrastructure sector. India needs to spend at least Rs 50 lakh crore in next five years through the year 2022 to develop infrastructure, the country will see close to Rs 3,000 crore investment per day, according to a recent CRISIL report.