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Pre-budget rally may pick up in new F&O series

'Make in India' campaign likely to get policy direction in February budget; infrastructure, capital goods may get boost, say market mavens

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The Union budget, slated on February 28, is likely to give a greater impetus to infrastructure, capital goods and manufacturing sector.

The markets are beginning to discount the budget and a pre-budget rally should be seen in the F&O February series starting January 30. The government's 'Make in India' campaign is likely to get some policy direction in the February budget, say industry experts.

With the government planning to increase the capital expenditure, investment- related sectors like infrastructure and manufacturing, are believed to have a greater impact. On the other hand, some sectors like consumer durables may face the brunt of excise duty hikes. According to Kunj Bansal, chief investment officer at Centrum Broking, the government could also increase excise duties on non-durable goods along with cigarettes, if it fails to find enough alternate sources for increasing revenue.

The government's focus will, however, be on achieving the 2016 fiscal deficit of 3%, but the markets are keenly awaiting the current year's fiscal deficit figures, the target of which was set at 4.1%. It is widely anticipated that finance minister Arun Jaitely will rationalise subsidies and increase plan expenditure. Dipen Shah, senior vice-president, Kotak Securities, said, "Fiscal consolidation and fiscal rectitude will form the cornerstone of the Union Budget 2015."

The government was also likely to move towards a stable tax regime, he said. Crucial bills passed through ordinances like coal e-auctions, land acquisitions and insurance amendments will come up during the budget session beginning from February 23 and this could add to the pre-budget mood on the bourses, if passed. Insurance companies may see renewed action in the run up to the budget, say market players.

"There is a possibility of widening the scope of foreign participants in the railway and defence manufacturing sectors in the coming budget," said market analyst, A K Prabhakar. This could help heavy engineering companies like Siemens, Thermax and PSUs like Bhel, Bharat Electronics Ltd and BEML, he said. BEL is a leading manufacturer of defence equipment like radar while Bhel and BEML have presence in the railway sector.

Rajiv Mehta, associate vice-president-research, IIFL, believes NBFCs engaged in infrastructure financing like IDFC, L&T Financial holdings, PFC can expect positive outcomes from the budget. Prabhakar, believes the Nifty to touch 9200 points and the Sensex to reach anywhere between 31500-32000 before the budget.

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