Budget 2020-21: Finance Minister Nirmala Sitharaman is set to present her second Budget speech in the Parliament on February 1, 2020. So far, this week, markets are going through volatility mainly due to fears about fast-spreading of coronavirus, corporate earnings season and Union Budget. “The Union Budget which is scheduled on Saturday i.e. Feb 1 is one everyone’s radar. In short, traders should prepare themselves for a roller-coaster ride. We advise focusing more on risk management aspects in such a scenario and preferring stocks that are trading in tandem with the benchmark,” Ajit Mishra, VP – Research, Religare Broking Ltd said.
In the run-up to the budget, there are certain stocks that are expected to deliver good returns if bought before the presentation of Budget. “Telecom operators must pay 3-6% and 8% of their adjusted gross revenue (AGR) as spectrum usage charges and license fees, respectively, to DoT,” Pritam Deuskar, Fund Manager, Bonanza Portfolio Ltd said.
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The brokerage has given a ‘buy’ rating to Bharti Airtel, with a stop loss of below Rs 488 and a target price of Rs 600 plus, an upside of over 14 per cent. While from the NBFC sector, the top picks are Koltepatil (Stop loss- Rs 229, Target price- Rs 320), LIC Housing Finance (Stop loss- Rs 408, Target price- Rs 580) and Avas Financiers (Stop loss- Rs 1,900, Target price- Rs 2,250).
The government is likely to provide higher budgetary allocation towards development-oriented schemes to meet its Rs 102 lakh crore investment planned towards the infrastructure sector over the next five years. “This will have a positive impact on the Infrastructure and construction sector. The top stock picks are KNR Construction, PNC and LT, ” ICICI Direct research said in a note.
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“FY21 could witness a 43% jump in infra spending over FY20 as per govt plan. Could be funded outside the budget,” Emkay Global Financial Services said in a research note in reference to the announcement of National Infrastructure Pipeline (PIP) from the infrastructure sector. The preferred stocks from the infra sector are Sadbhav Engineering, PNC Infratech, KNR Construction, IRB Infrastructure, Ashoka Buildcon, NCC, Dilip Buildcon. From the Oil and Gas sector, the brokerage company has recommended IOCL, BPCL and HPCL. “Petrol and diesel excise duty could be hiked due to fiscal pressure. It is fully passable though some sentimental near-term negative stock impact could be there for OMCs (IOCL, BPCL and HPCL),” Emkay Global Financial Services said.
Government’s focus on building metros, railways and development of roads, highways are driving growth in the infrastructure sector. “Recently, the government has announced a plan to spend a total of Rs 105 lakh crore on the infrastructure sector in the next 5 years. Upcoming projects like development of smart cities will also add to the growth. Infrastructure sector is a key growth driver for the economy and hence it receives intense focus from the government during policy decisions. We recommend BUY on Rites with a target price of Rs 370 per share,” Narendra Solanki, Head of Fundamental Research- Investment Services, Anand Rathi Shares and Stock Brokers said.