Last Updated on Feb 4, 2022 by Aradhana Gotur

Budget 2022 underlines the government’s objective of fiscal consolidation and capex-driven growth. As per Jefferies, capital goods, pipe, and cement companies are beneficiaries of the budget announcements, whereas rising yields may adversely impact equity market sentiment—especially for NBFCs.

Following are Jefferies’ top stock picks and sectors for post-Budget 2022:

1. Capex/Infrastructure: 15% y-o-y rise in the capex outlay spend is a tailwind for the sector. Companies such as L&T are the beneficiaries. Now that data centres will get the status of infrastructure, a tax holiday may be on the cards, which is positive for Siemens and ABB. Defence expenditure is up 10% y-o-y, which is good news to Bharat Electronics and L&T.

2. Tobacco: Unchanged taxes on cigarettes and buoyancy in GST trends are positives for ITC.

3. Diamond and gemstones: Cut and polished diamonds and gemstones will attract a reduced customs duty of 5% from 7.5%, which is positive for Titan. The sale of studded jewellery accounts for 30% of its sales.

4. Pipes: Supreme Industries, Finolex Industries, and Astral will benefit from the 33% increase in piped drinking water scheme budget.

5. Manufacturing: Increased funds allocated to the Production Linked Incentive (PLI) scheme for solar cell manufacturing and extending the deadline to FY 2024 to establish new manufacturing capacities are good news for RIL.

Aradhana Gotur
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