What we saw on Friday was more than a relief rally

In the parlance of Jesse Livermore, the famous Wall Street trader, the path of least resistance for the stock market is higher, yet investor resistance to stocks as evidenced by what people actually do with their money remains subservient to events such as the Central Budget and monetary policy. So, it?s a good thing that Budget 2010 is extremely positive for Indian stocks. We list some companies that are likely to benefit.

Budget 2010 has truly come as a positive for auto companies, with measures like R&D exemption. The concessional 4% excise for inputs of electrical vehicles is positive for those trying to foray into this space. The enhanced weighted deduction should be positive for those like Tata Motors and Ashok Leyland. The FM also reiterated his aim to implement DTC and GST. These would help rationalise taxes and reduce the cost of vehicles; savings can then be passed on to consumers. Again, companies like Maruti Suzuki, Tata Motors and Ashok Leyland would benefit.

Increase in education outlay augurs well for companies such as Educomp, Everonn, Edserv and Core Projects. Emphasis on the use of technology for delivering financial services, the UID programme and extension of smart cards to NREG could benefit companies such as Bartronics.

Focus on new and renewable energy?such as exemption on inputs for making rotor blades from excise?is positive for Suzlon. Reduction in duty for photovoltaic units will benefit Moser Baer. The goal of adding solar power would benefit companies like Monnet Ispat. Formation of a National Clean Energy Fund would help JP Hydro and Suzlon.

Higher defence allocation would help BEL, M&M and Nelco. But clean energy cess on coal would be negative for power-generating companies like Tata Power and Adani Power. Monorail projects have been notified for project import benefits, which could help Reliance Infrastructure, Larsen & Toubro and Gammon India.

The government recognises the need to expedite and consolidate infrastructure efforts. Once such investment increases, various sectors will benefit?construction, engineering, financial development. This will help Punj Lloyd, Gammon India, IVRCL, HCC, Larsen & Toubro and Nagarjuna Construction. Additional tax deduction for investment in infrastructure bonds will benefit infrastructure finance companies such as IDFC and Power Finance Corporation of India.

A tax holiday for the hotel industry augurs well for Indian Hotels, East India Hotels and Mahindra Holidays. The Rs 61,000 crore set aside for rural development programmes would be positive for companies such as Hero Honda and the Punjab National Bank. For pharma companies, the budget is tax-neutral since the enhanced weighted deduction on R&D is compensated by increased MAT on companies.

Increase in excise duty on cement will only partially impact cement companies, since enhanced impetus on infrastructure and road development will enhance their revenues. A one-time grant of Rs 200 crore has been provided to the export-focussed Tirupur textile cluster in Tamil Nadu, which would benefit many textile export companies.

The Rs 300 crore allotted for agriculture impetus will benefit companies such as Jain Irrigation and Advanta India. Customs duty exemption has been granted on input for refrigerated van manufacturers and those setting up cold storages will be exempted from service tax. This will be positive for companies in the value chain involved in producing, storing and distributing agricultural produce. Even retail chains such as Big Bazaar and Reliance Retail could benefit. This could give a great fillip to organised retail.

Duty exemption has been extended to handset manufacturers and this is good for companies like Spice Mobiles. Increased computerisation of tax administration would be positive for companies such as Vakrangee Software that specialise in computerisation of government records. Concessional customs duty of 5 % on all medical appliances shows the government?s focus on healthcare and is positive for companies such as GE (not listed in India), Opto Circuits and Siemens. That the allocation to the power sector has more than doubled is positive for companies like NTPC, Adani Power and Reliance Power.

RBI?s considering some additional banking licences to private companies and NBFCs will be positive for banks such as HSBC, Barclays and Citibank that are listed overseas and have grandiose expansion plans in India. In India, private players such as IFCI and Reliance Capital will benefit. The plan for recapitalisation of banks will be positive for Syndicate Bank, Dena Bank, UCO Bank and Central Bank of India.

Focus on slum redevelopment is positive for companies like HDIL. Extension of interest subvention to March will be positive for real estate developers such as Parsvanath and Sobha Developers.

The market rallied more than 350 points post-Budget but ended only 175 points higher. This was not just a relief rally. The trend is clearly showing an upward bias. A unique identity symbol is to be provided for the Indian rupee in line with currencies like the US dollar. This Budget will surely propel India forward on the world scene, not only because our currency will get a global look, but also because our country suddenly seems global in vision and intent.

The author is a Wharton Business School MBA and CEO, Global Money Investor