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Top ten stocks themes to watch out for in Union Budget 2016

Top ten stocks themes to watch out for in Union Budget 2016

Here is a list of top ten stocks themes that are likely to be in focus today:

ITC, Godfrey Phillips: Shares of ITCBSE -0.93 % and Godfrey Phillips have fallen 11% and 27% respectively so far in the year 2016. The expectations are that there will be a likely increase in excise duty on cigarette and Indian manufactured liquor to curb consumption is likely to hurt players like ITC, Godfrey Phillips, and liquor companies such as United SpiritsBSE -3.97 % and Radico KhaitanBSE -0.16 %.

PSU banks: The Nifty PSU index has fallen nearly 50% in the last one year. Almost all the stocks in the index haven fallen over 20%. In the Economic Survey, the government said that it plans to infuse Rs 70,000 crore in the next few years, but PSU banks would need at least Rs 1.8 lakh crore by FY19. Any roadmap laid down by the government in terms of recapitalization will be positive for PSU banks.

Cement stocks – JP Associates, UltraTech: Higher budgetary spends by the government on housing and infrastructure sectors is likely to support growth for cement sector. The expectations are that there could be a reduction in excise duty to 8% from 12.5% which will lead to improvement in margins.

Defence stocks – BEL: The government announced a 16.9% year-on-year increase in core defence capital outlay to Rs 86,536cr. The expectations are that the sector should get a boost from the budget under Make in India. Analysts expect 15% increase in budgetary allocation.

Metro – BEMLBSE 2.41 % & Titagarh Wagons: The government has already allocated Rs 8,000 crore towards domestic Metros in FY2016. Brokerage firms expect the government to increase allocation towards Metros by 20% in the upcoming budget.

Water Treatment – ThermaxBSE -0.51 %, VA Tech Wabag: Water resources and river development is likely to gain traction in 2016 budget session. Experts are of the view that as much as Rs 500cr could be made towards Ministry of Water Resources, river development and Ganga rejuvenation.

Renewable Energy – InoxBSE -2.63 %, Suzlon, ABB: The government is likely to extend the subsidy towards renewable energy. The wind Energy players tend to benefit from generation based incentives.

Education – MT Educare, NIIT, ZEE Learn: The Economic Survey pointed towards development of human capital. The government has already allocated Rs 1543 crore in FY16 and this allocation is expected to increase in FY17.

Roads & highways – KNR Construction, MBL Infrastructure: The government is likely to continue its focus on developing highways in budget 2016 as well. It is likely that NHAI would set a target of 15,000kms in FY2017. “We are expecting a 30% increase in budgetary allocation towards the Roads & Highways Ministry,” said an Angel Broking report.
Import Duty on Steel – JSW SteelBSE 1.22 %, SAILBSE 2.31 %, Tata Steel: The government raised the import tax on certain steel products to 12.5% in August 2015 from 10% earlier. Expectations are that import duty is likely to increase to 15%-25%. While basic custom duty on Metallurgical Coke can be reduced to Nil from 2.5%-5%.

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