Budget 2018: Not sure where to invest post Budget? Top 20 winning stocks to buy

On the overall basis, long-term capital gains tax doesn’t look dampening and revenue growth assumptions are looking realistic. Investors should focus on sectors/stocks having agri or rural theme. Escorts, Ashok Leyland, M&M, PI Inds and UPL will be positive.

   

The Finance Minister Arun Jaitley delivered the complete opposite of what the D-Street was expecting. Nevertheless, D-Street put up a brave face as the finance minister tinkered with the long-term capital gains tax (LTCG).

It was a political budget but at the same time balanced. Although, the rise in the fiscal deficit, as well as 10 percent tax on LTCG, might come as a disappointment to investors which is likely to be a short-term negative for D-Street.

However, after knee-jerk reaction the focus will shift back to earnings, say experts. The Disinvestment target of Rs80,000 crore for 2018-19 is conservative but again lacks boldness in divesting non-core assets.

“The Budget, being the last one before a general election was expected to tilt toward the voting populace and so it has played out accordingly. The MSME segment which bore the full brunt of the disruptions last year has been given some succour.

Now, that the event is behind us, it is likely the market would take the changes in its stride over the next few weeks and focus more on actual earnings which look like they should have a better year than at least the last few.

The focus of the Budget was largely on infrastructure, healthcare, education, agriculture sectors. Hence, the next set of multibaggers will come from this theme which is also the crucial question - where should investors put their money? Are there any stocks which are likely to gain the most from Arun Jaitley’s Budget 2018?

“On the overall basis, long-term capital gains tax doesn’t look dampening and revenue growth assumptions are looking realistic. Investors should focus on sectors/stocks having agri or rural theme. Escorts, Ashok Leyland, M&M, PI Inds and UPL will be positive,” Hemang Jani, Head Equity Sales & Advisory, Sharekhan told Moneycontrol.

“Other picks include names like Apollo Tyre: Raise in customs duty on truck-bus radial tyres from 10 to 15 percent to benefit the company. ITC: No increase in tax rates on Cigarettes – Qtrly nos have been in-line,” he said.

We have spoken to various experts and here are 20 stocks which are likely to benefit the most from the Budget, do you own any?

Analyst: Vinod Nair Head of Research at Geojit Financial Services

Escorts

Escort Ltd (EL) will be a direct beneficiary owing to the government focused approach to encourage farm mechanization and growth in infrastructure segment.

The total allocation for Rural, Agriculture and Allied sectors was Rs2 lakh core which is 10% higher than the previous budget.

Agricultural credit has also increased by 10% and fixed at a record level of Rs11 lakh crores, which is expected to drive demand for tractors. Similarly, Bhart mala projects will create additional demand for construction equipment’s segment.

Interglob Aviation (Indigo)

In the last 3 years, the Indian domestic air passenger traffic grew at 18% per annum, while domestic carriers were facing congestion in major airports.

Considering this, the proposal for increasing the capacity of 124 airports by 5 times is expected to boost the number of flights operated, higher traffic growth and operational efficiency. Indigo will be a key beneficiary from this move given in 40% in Indian aviation sector.

UPL Ltd:

The Minimum support price (MSP) of 1.5 times of the cost of production for notified crops and increase in Institutional credit for the agriculture sector to Rs.11 lakh crore is expected see an uptick in the area under cultivation which will boost demand for seeds and crop protection.

UPL with presence across agri-input value chain from seeds to post-harvest chemicals will be a key beneficiary from this.

Larsen & Toubro (L&T)

Allocation for NHAI and Roads & Bridges has increased by 16% to Rs 70,544cr from 60,671cr This will improve the outlook for infrastructure, EPC and BOT companies like L&T.

Additionally, the government is targeting to complete 9,000km of the national highway in FY18 which will help to rejuvenate the current execution cycle of EPC companies.

NBCC (India) Ltd

Urbanization is another priority for the government, like smart city and AMRUT. The total cash outlay is expected to be Rs2.04lakh crore, with as many 99 cities selected under the ambitious Smart city mission.

NBCC has been a Navaratna enterprise under Ministry of Urban development having expertise in executing large projects, is expected to be a key beneficiary.

Analyst: Rakesh Tarway, Head Research, Reliance Securities

HUL, Hero Motocorp, ITC, Godrej Agrovet:

Government impetus on rural spending will have a far-reaching impact on growth rates of country and reduction of income gaps in society. Companies and sectors deriving the majority of revenues from the rural economy like 2 wheelers, FMCG Companies, fertilizer companies will benefit from the push to rural spending.

KNR Construction, J Kumar, NCC, JK Cement and Sagar Cement:

Budget 2018 continued to put a strong focus on infrastructure development, which is in line with the expectations. FM has allocated an extra-budgetary support of Rs5.97 lakh crore compared to Rs3.96 lakh crore in the last budget for the infrastructure sector, which is encouraging as India needs a large amount of investment in infrastructure due to growing needs.

We understand higher allocation in infrastructure segment will essentially expedite infrastructure development in the country, which in turn will aid many industries i.e. metals, cement, building materials, etc.

We like construction companies like KNR Construction, J Kumar, NCC to play infrastructure theme from the budget. We also like cement companies like JK Cement and Sagar Cement to benefit from push to infra.

Thyrocare and Dr. Lal Path Labs:

Union Budget has also proposed coverage of Rs 5Lac per household to total 10 Cr households for hospitalization. The move will benefit hospital chains like Apollo Hospitals and Narayana Hrudyalay.

It will also have a positive rub-off impact on companies like Thyrocare and Dr. Lal Path Labs. Insurance companies will also benefit because of insurance premium received towards coverage of families.

Gruh Finance, DHFL, and Can Fin Homes:

Among other major initiatives budget has proposed the creation of affordable housing fund under NHB. This will benefit all affordable housing players like Mahindra Lifespace, Ashiana Housing etc.

It will also have a positive impact on affordable housing financiers like Gruh Finance, DHFL, and Can Fin Homes.

Apollo Tyres and JK Tyre:

Within tax proposals, the budget has proposed to increase customs duty on imported Truck and Bus Radials from 10-15 percent, which will benefit companies like Apollo Tyres and JK Tyres who have major exposure towards truck tyres.

MORE WILL UPDATE SOON!!

Here are the updates on the finance minister’s Union Budget 2018 speech:

•Propose to increase the custom duty on mobiles from 15% to 20% and on some other mobile parts to 15%, and some parts of TVs to 15%. 

• Propose to increase the health and education cess to 4% 

• Propose to tax long term capital gains exceeding Rs 1 lakh in listed stock at 10%.

 • Rs 50,000 additional benefit to senior citizens for investment in mediclaim. 

• A standard deduction of additional Rs 40,000 for salaried employees. This move will benefit 2.5 crore taxpayers.

 • No changes in the structure of income tax of individuals.

 • Rs 7000 crore will be the revenue foregone for the reduced corporate tax on MSMEs.

 • I propose to extend the benefit of the reduced corporate rate of 25% for companies with reported turnover of up to Rs 250 crore.

 • 100% tax deduction for the first five years to companies registered as farmer producer companies with a turnover of Rs. 100 crore and above.

 • 41% more returns were filed this year, which shows that more people have joined the tax net. 

• Demonetisation was received by honest taxpayers as ‘Imaandaari ka utsav’.

 • Revised fiscal deficit estimate for 2017-18 is 3.5% of GDP, fiscal deficit of 3.3% expected for 2018-19. 

• Automatic revision of MPs’ emoluments every five years, indexed to inflation.

 • Emoluments of President, Vice President and Governor being revised: Rs 5 lakh; 4 lakh; Rs 3.5 lakh per month respectively.

 • Exceeded the disinvestment target and collected Rs 1 lakh crore: FM.

 • The government insurance companies to be merged into a single entity, and subsequently listed in the stock exchange, as part of the disinvestment programme.

 • The government will assign every enterprise in India a unique ID on the lines of Aadhaar.

 • The government has identified 372 basic business reform actions. Each state will take up these reforms.

 • We will explore the use of blockchain

. • Rs 5.97 lakh crore allocated for infrastructure spending in India.

• 5 lakh WiFi hotspots to be set up in rural areas to provide easy Internet access. 

• Redevelopment of 600 major railway stations has been taken up; Mumbai transport system is being expanded; suburban network of 160 km planned for Bengaluru.

 • The government proposes to revamp the system of sanctioning of loans to SMEs. The information required for sanctioning the loan will be linked with GSTN and all required information can be fetched from GSTN Portal. It will help to grant the loans quickly and will help in reducing processing time.

 • UDAN will connect 56 unserved airports in India.

 • An institute is coming up at Vadodara to train people for the bullet train programme.

 • AMRUT programme will focus on water supply to all households in 500 cities. Water supply contracts for 494 projects worth 19,428 core awarded. 

• Rs 1,48,528 crore is the capital expenditure for the Indian Railways for 2018-19... All trains to be progressively provided with WiFi, CCTV and other state-of-the-art amenities. 

• Bharatmala project approved for better road connectivity at Rs 5.35 lakh crore.

 • Proposal to develop 10 prominent tourist destinations as Iconic tourism destinations.

 • Women’s contribution reduced to 8.33% towards PF in the first 3 years for new EPF accounts... The government will contribute 12% of EPF contribution for new employees in all sectors. 

• 70 lakh farming jobs have been created this year, shows an independent study. 

• Rs 3 lakh crore allocated for PM MUDRA Yojana.

 • The government is slowly but steadily progressing towards universal health coverage.

 • Announce allocation of Rs. 56,619 crore for SC welfare and Rs. 39,135 crore for ST welfare

 • Healthcare stocks trading higher after the government said it proposed to cover 100 million families via healthcare protection scheme. Apollo Hospital Ltd rose 4.1%, Thyrocare Technologies Ltd 2.6%, Healthcare Global Enterprises Ltd rose 3%. 

• Mass formalization of MSME sector is happening after demonetization and GST. 

• Total 187 projects sanctioned under the Namami Gange programme. 

• 24 new government medical colleges and hospitals to be set up by upgrading existing district hospitals.

 • Rs 600 crore for nutritional support to TB patients.

 • One medical college per every three constituency.

 • Have decided to take healthcare protection to a new aspirational level. Launching a flagship National Health Protection Scheme to cover 10 crore poor and vulnerable families, benefiting approx. 50 crore. Providing Rs 5 lakh per family per year for medical reimbursement, under National Health Protection Scheme. This will be world’s largest health protection scheme

 • Rs 1200 crore for the flagship programme in health wellness centres.

 • Eighteen new schools of planning and architecure will be set up... I propose railway university in Vodadara.

 • Eklavya schools to be started for Scheduled Tribe population... Scheme for revitalizing school infrastructure, with an allocation of 1 lakh crore rupees over four years. Called RISE - Revitalizing Infrastructure in School Education. 

• Integrated B.Ed programme to be initiated for teachers, to improve quality of teachers. 

• Technology will be the biggest driver in improving education. 

• Rs 14.34 lakh crore to be spent for providing livelihood to rural India through infrastructure building.

 • Loans to self help groups will increase to Rs 75,000 crore by March 2019. 

• We aim that by 2022, all poor people have a house to live in.

 • In the next financial year, we target the construction of two crore toilets.

 • Removal of crop residue to be subsidised in order to tackle the problem of pollution due to burning of crop residue:

 • Ujwala will give 8 crore women new LPG connections. 

• Special scheme to address air pollution in Delhi-NCR region.

 • Credit for agricultural activities is up from Rs 10 lakh crore to Rs 11 lakh crore . 

• Fishery and aquaculture and animal husbandry funds with a total corpus of Rs 10,000 crore.

 • Agri-Market Development Fund with a corpus of Rs 2000 crore to be set up for developing agricultural markets. 

• Restructured National Bamboo Mission to be launched with an allocation of Rs 1290 crore to promote bamboo sector in a holistic manner.

 • Grameen Agricultural Market (GRAM) will provide farmers a means to sell directly to buyers.

 • Rs 500 crore announced for Operation Green.

 • Allocation to food processing ministry is being doubled from Rs 715 crore to Rs 1400 crore. 

• Cluster-model approach to be adopted for agricultural production. 

• The focus is on low-cost farming, higher MSP. Emphasis is on generating farm and non-farm employment for farmers. 

• 470 APMCs have been connected to eNAM network, the rest to be connected by March 2018... Agri-Market Development Fund with a corpus of 2000 crore to be set up for developing agricultural markets 

• Desh mein krishi utpadan record star par hai, 2022 tak kisaano ki aay dugni karenge. 

• Agri-related stocks gain after it is said MSP for all crops to be increased by 1.5 times. Kaveri Seeds Co Ltd rose 2.4%, Jain Irrigation Systems Ltd 2.1%, Escorst Ltd rose 5%, Mahindra & Mahindra Ltd rose 2.2%. 

• The government will ensure payment of full MSP even if farmers sell below MSP. 

• The Minimum Support Price of all crops shall be increased to at least 1.5 times that of the production cost.

 • Our government has ensured that services and benefits reach people directly. The direct benefit transfer in India is the biggest such exercise in the world. 

• Maximum governance, minimum government has ensured India has climbed 42 places in the ease of doing business... We are now working toward easing of living in India 

• Budget 2018 will focus on agriculture and rural economy, health, infra, senior citizens: FM

 • This year’s budget will focus on strengthening rural and agricultural economy. 

• India grew at an average of 7.5% in the first three years since 2014. It is now a 2.5 trillion dollar economy. 

• All the structural reforms will help the economy in the short and longterm... India is expected to become the fifth largest economy very soon.

 • Our government has implemented structural reforms.

 • India stands out as the fastest growing economy in the world... There is a premium on honesty.

 • Finance minister Arun Jaitley begins his Budget speech.

MORE WILL UPDATE SOON!!

Sensex, Nifty take a hit post Budget 2018. 5 reasons weighing on sentiment

LTCG, fiscal slippage and global selloff, among others, are some of the reasons behind this fall.

   

A day after Finance Minister Arun Jaitley presented the Union Budget 2018, equity markets in India took a beating on the back of several announcements made in his speech.

The Sensex lost over 300 points intraday in the opening minutes of trade, while the Nifty lost almost 100 points and traded near 10,900 levels.

Midcaps have continued to crack, while financials, pharma and metals are trading weak as well.

Long-term capital gains tax

The move surprised D-Street as most analysts were factoring in a change in definition of ‘Long Term’ to 2 or 3 years from 1 year. An imposition of additional tax over and above this time-frame issue spooked investors.

The government introduced the much talked about long term capital gains tax (LTCG) on sale of listed securities on gains of over Rs1 lakh.

Jaitley, introduced a long-term capital gains tax of 10 percent if the gains exceed Rs 100,000 without allowing the benefit of indexation. However, all gains till January 31, 2018 will be grandfathered and short term capital gains remains unchanged at 15 percent.

Fiscal slippage

The market is also worried about the fiscal slippage issue, largely because of the degree of deviation as well.

The government revised the fiscal deficit target to 3.5 percent of GDP to for 2017-18, indicating a deviation from the path of fiscal consolidation because of a spillover impact of the new indirect tax system—Goods and Services Tax.

For the next financial year 2018-19, fiscal deficit target is pegged at 3.3 percent of Gross Domestic Product (GDP).

“Revised fiscal deficit estimates for 2017-18 are Rs 5.95 lakh crore at 3.5 percent of GDP. I am projecting a fiscal deficit of 3.3 percent of GDP for the year 2018-19,” Jaitley said while presenting Union Budget, 2018.

Tax on income from equity mutual funds

In times when flows from mutual funds were one of the highest, the imposition of a fresh tax on income from them could have spooked investors too.

Investors will have to pay 10 per cent tax on distributed income from equity oriented mutual funds, as per the Budget proposals announced.

Besides, the overall investor sentiment will be hit with the introduction of 10 per cent tax on long term capital gains exceeding Rs 1 lakh, as mutual funds have recently emerged as a key route to invest in stock markets, experts said.

Global markets

The Nifty futures on Singaporean exchange (SGX Nifty) was trading were trading over a 100 points lower, hinting at the selloff that is visible in Indian market as well.

Meanwhile, other global indices are trading weak too, probably why the market is showing weakness here as well.

Asian shares came under pressure after Wall Street closed mixed and yields on US government debt rose in the last session.

Japan's Nikkei 225 declined 1.3 percent after snapping a six-day losing streak in the previous session. Technology names were mostly lower, with heavyweight SoftBank falling 1.5 percent.

The US equities pulled back as investors worried about rising interest rates.

The S&P 500 declined 0.1 percent to close at 2,821.98 after rising as much as 0.4 percent. The Nasdaq composite fell 0.4 percent to 7,385.86. Earlier, the tech heavy index traded 0.4 percent higher as Facebook shares hit an all-time high. Facebook reported better-than-expected earnings and revenue on Wednesday.

Technical factors

The D-Street on Thursday witnessed a volatile day as the index moved in a band of over 200-points on throughout the trading session which led to a formation of a ‘High Wave’ kind of pattern on the daily candlestick charts.

A High Wave kind of pattern is formed when there is a long upper shadow and a long lower shadow with a small body. The pattern is similar to a spinning top kind of pattern but in the high wave, the shadows are longer.

Experts said that if bears manage to push the indices below 10900 levels on closing basis then trend should turn in their favour. Traders are advised to maintain a stop below 10900 levels on closing basis.

A fall around those levels in the opening tick could have led to the selloff here.

MORE WILL UPDATE SOON!!

Life after Budget! Nifty could see up to 5% fall while Midcaps could correct by 10%:

India market could see a bit of correction in the short term but the market has been correcting in the last one month even though Nifty rose in the same period.

   

The Budget 2018 might have left investors thinking about equity markets after the finance minister Arun Jaitley imposed LTCG tax of 10 percent but the word coming from market is “Bullish”.

“I am bullish on India for the long-term and see Nifty hitting 17000 levels in the next 3 years. However, in the short term, we could see a correction of up to 5 percent in the Nifty and up to 10 percent in Midcap index.

India market could see a bit of correction in the short term but the market has been correcting in the last one month even though Nifty rose in the same period. Globally, we have seen some bit of selloff, and now we are getting synced with global markets.

Corrections are part of ever bull market and the corrections have already started in the midcap stocks, highlighted Suri. He further added that if we look at the stocks giving fresh 52-weeks high have deteriorated for the last one month.

In a larger bull market, every month can’t be positive. In fact, it is an amazing time for stock pickers. Investors who are sitting on sidelines and waiting for a correction, this is a great time. Look for companies and pockets where you see strength in the fall,” said Suri.

Globally, US bond yields will be something which investors should watch out for. “We are part of a global bull market for the next 3 years; MSCI EM is the best-looking chart,” he said. Tracking gain on the index, Suri expects Indian equity market to give a 15-17 percent CAGR over next 3 years.

Commenting on Crude, Suri said that investors should watch out for Brent at USD 70/bbl which will be a crucial resistance level.

Sectors to Watch:

IT:

IT is likely to do well, it is the new kid on the block. It has been through a consolidation of almost 2-3 years and is now looking to emerge as a leader.

Commodities:

Suri said that he has been bullish on commodities since Diwali. The theme is likely to do well in the future. The underlying commodity chart suggests big rise.

Insurance:

There is under ownership in this sector, and once investors start realizing it will be in focus.

MORE WILL UPDATE SOON!!

Hint of Caution! Midcap index could see a fall of up to 10%; should you invest?

The Budget proposed 10% long-term capital gains tax (LTCG) which is weighing on investor sentiments on Friday. The fall was led by a sharp correction in the small & midcap stocks which have plunged up to 30 percent in a single day.

 

The star performers of the year 2017 – the S&P BSE Midcap and the Smallcap indices came under pressure from the start of the year 2018 even though the benchmark indices rose to fresh record highs.

The S&P BSE Midcap index rose 48 percent while the S&P BSE Smallcap index rose by about 60 percent compared to 28 percent rally seen in the S&P BSE Sensex, and about 29 percent rally in Nifty50.

The Budget proposed 10% long-term capital gains tax (LTCG) which is weighing on investor sentiments on Friday. The fall was led by a sharp correction in the small & midcap stocks which have plunged up to 30 percent in a single day.

Analysts’ advise investors to stick to quality stocks if somebody is planning to buy stocks on declines as valuations have exceeded long-term averages and look slightly stretched.

There are two parts to the fall seen today in the market. The broad market is reacting negatively to the excessive focus on rural and social schemes and the return of LTCG tax. There is stock specific pressure due to un-winding of positions in high beta stocks,” 

Market will take few days to absorb these proposals. Investors should be looking at buying into quality names in insurance, like Bajaj Finserve and others like BEL, which has corrected sharply in past few days. Besides these L&T, and rural economy focussed companies like Escorts, M&M, and PI Industries etc. with one-to-two years.

The mid and smallcap stocks popularly known as high-beta stocks suffered a double-digit fall of up to 20-30% so far in the year 2018. And, the warnings signs look visible that the broader markets are on a course of correction which could extend up to 10 percent on the index level.

The S&P BSE Midcap index was over 2 percent weighed down by losses in Vakrangee Software, GMR Infrastructure, Cummins India, Reliance Communications, Reliance Infra, Dalmia Bharat, and Adani Power.

The S&P BSE Smallcap index was down over 3 percent weighed down by losses in PC Jeweller (down 15%, it slipped up to 60% intraday), followed by Jindal Saw (down 10 percent), Kolte Patil (down 9.7 percent), and S P Apparels (down 8 percent).

The Budget 2018 might have left investors thinking about equity markets after the finance minister Arun Jaitley imposed LTCG tax of 10 percent but the word coming from market is “Bullish”.

I am bullish on India for the long-term and see Nifty hitting 17000 levels in the next 3 years. However, in the short term, we could see a correction of up to 5 percent in the Nifty and up to 10 percent in Midcap index.

Technical Outlook:

Nifty Midcap:

The Midcap Index has been underperforming the headline Indices from the start of 2018 led by profit booking. Further, it has turned down after hitting the upper end of a channel pattern, currently approaching the lower end of the channel placed at 19800. However, immediate supports are placed between 20285-20200.

Moreover, a sustained trade above 21000 can halt the current corrective phase taking the Index to new highs of 22190. RSI has also eased off from overbought levels suggesting higher levels in the coming trading sessions.

Nifty Smallcap:

The index is down 3.5% so far in 2018 underperforming the headline Indices. Further, it turned down from the upper end of the channel after reaching overbought levels. Immediate support on the downside is placed between 8620-8300 being 38.2% & 50% Fibonacci retracement levels respectively.

Correction to these support levels can be used to accumulate stocks gradually as the major trend remains upward bias. Resistance on the upside is placed at 9400-9650. The RSI has cooled off from overbought levels suggesting resumption of the uptrend in the offing.

MORE WILL UPDATE SOON!!

Bajaj Auto Q3 profit seen up 14%, healthy sales volumes may drive revenue growth

Analysts expect realisations to rise 4.2 percent YoY to Rs 62,022 per unit, driven by improvement in product mix and price hikes taken on November Bajaj Auto's third quarter (October-December) profit is expected to increase 14.5 percent to Rs 1,058 crore, from Rs 924.6 crore in same quarter last year.

  

Revenue from operations may grow 24 percent to Rs 6,251 crore from Rs 5,067 crore YoY, according to average of estimates of analysts polled by CNBC-TV18.

The stock is trading near its all-time high and already rallied 20% in the last one year.

Volume growth was healthy during the quarter, rising 17.5 percent YoY to 10.01 lakh units from 8.5 lakh units.

Export markets have also seen good recovery, showing a 25.5 percent growth YoY led by 3-wheeler.

Domestic 3-wheeler volumes increased 105.4 percent and exports jumped 48.4 percent YoY, but higher 3-wheeler sales were offset by big drop in domestic motorcycle sales.

Domestic motorcycle volumes declined 38 percent YoY.

Analysts expect realisations to rise 4.2 percent YoY to Rs 62,022 per unit, driven by improvement in product mix and price hikes taken on November 1.

Operating profit during the quarter is seen rising 19 percent to Rs 1,240 crore, but margin may contract 70 basis points to 19.9 percent compared to year-ago due to higher commodity prices.

MORE WILL UPDATE SOON!!