Every budget has its own winners and losers in terms of stocks and sectors. Without getting into the nuances of the individual stocks, here are some sectors that are likely to be impacted
Impact on Insurers and AMCs
This sector was the clear loser on the day of Union budget and the reasons are not far to seek. The LIC IPO is expected to crowd out private insurers and the scarcity premium could vanish. Also, the dual tax regime could mean that the basic tax-related attraction of life and health policies may not exist any longer. Insurers really need to rethink their strategy under these conditions. This will apply to AMCs too although only to the ELSS story. Debt funds could get hit by the higher levels of fiscal deficit and the impact of the same on bond yields and on bond prices.
Impact on PSU banks
Most banking stocks took a sharp hit on the day of the budget. Firstly, the budget has not made any provision for the recapitalization of banks. Clearly, after sinking in Rs.3.50 trillion, the FM is not keen on putting further funds. This is likely to be a dampener for the banks. The second thing working against banks is the high fiscal deficit. It is likely to lead to crowding out of private debt and also a spike in yields. With huge bond portfolios, this represents a huge price risk for the public sector banks.
Positive for IT companies
IT companies surely have reasons to celebrate in this budget. The proposal to set up data center parks on the lines of STPs opens up a huge window for the IT companies. In addition, the IT and education companies are to benefit from the recent plan to expand the training franchise for apprenticeships at the 100 leading training institutions. The IT stocks could benefit from the convergence of hardware, software, and learning.
FMCG stocks have done extremely well post the budget because the dual tax regime is clearly an incentive to reduce saving and increase spending. That is likely to have a multiplier effect on the consumption story. Most of these tax cuts are targeted at the lower to middle-income groups with a high propensity to consume. That could be a big boost to the FMCG and consumer durables.
Extended agri theme
The budget has laid out mega plans for the fisheries sector. Apart from creating 500 fish FPOs, the budget has also spoken about a big boost to fisheries exports to a level of Rs.1 trillion per year. This can be a direct positive for aqua and feed companies. At an indirect level, this is also a major positive for the Agri themes like tractors, hybrid seeds, farm equipment, drip systems, etc!