Last Updated on Jan 31, 2022 by Manonmayi

Analysts’ top picks include infrastructure, rural development, and healthcare equities, as India’s government prepares to increase expenditure in a budget aimed at reviving investment and boosting the economy. 

The policymakers explore methods to assist the economy out of the doldrums left by the pandemic. Construction spending, which includes roads and ports, as well as incentives for electric mobility and renewable energy are expected to be in focus in the address by the finance minister for Budget 2022.

India’s equity benchmark has fallen amid a recent global selloff sparked by fears about the Federal Reserve’s impending rate hikes and foreign funds exiting the market. The investors are looking for some relief from the budget statements. 

However, since Prime Minister Modi took office in 2014, the benchmark S&P BSE Sensex has only climbed in the month after the budget day in 3 of the last 8 yrs. On the other 5 instances, it has declined or traded in a narrow range. 

Below are some of the top sectors and stocks picked by a few leading brokers:

Infrastructure 

As the government continues to ramp up public investment to generate employment and stimulate the economy, a gauge of India’s top-30 corporations in roads, aviation, ports, shipping, railroads, and other utility services surged 36% in 2021. It is the highest gain since 2009. With increased expenditure on roads, military, water, housing, and trains. ICICI Direct expects the allocation to stay “buoyant”. 

Polycab India, HG Infra Engineering, KNR Constructions, PNC Infratech, Larsen & Toubro, Thermax, KEI Industries, ABB India, Siemens India, Ramco Cements, UltraTech Cement, ACC, Ambuja, Bharat Dynamics, Bharat Electronics, NTPC, Container Corporation of India are among the top picked companies.

Renewable Energy/EV

Analysts anticipate an abundance of support for infrastructure development for electric vehicles and renewable energy generation. This is to keep with the government’s goal of decreasing emissions and dependence on fossil fuels. 

Maruti Suzuki India, TVS Motors, Tata Power, Hero Motocorp, Adani Green, Bajaj Auto, Mahindra & Mahindra, Tata Motors, Minda Corporation, Dixon Technologies, Gabriel India are among the top picks.

Rural/Agriculture

According to sell-side analysts, more help for food processing, incentives tied to production along with higher farm credits, and subsidies for fertilizers and crop protection will continue to boost agricultural and rural regions. Consumer goods companies facing higher input costs will benefit from the increased agricultural expenditure.  

Top picks here would include PI Industries, Dhanuka Agritech, Rallis, Godrej Agrovet, Hindustan Unilever, Britannia, Dabur, and Nestle India

Healthcare/Pharma

As part of the focus on building healthcare infrastructure, there are certain expectations from the government. It is anticipated to raise spending on corporations to improve output, as well as tax relief for individuals buying health insurance, easier access to medical treatment and a generous push for drug research.

Some of the top picks here include Apollo Hospitals, Narayana Healthcare, Shalby Ltd, Gland Pharma, Krishna Institute of Medical Sciences, Healthcare Global Enterprise, Max Health, HDFC Life, SBI Life and most drug makers. 

Disclaimer: Brokers surveyed for sector top picks are Axis Securities, Religare Broking Ltd., ICICI Securities Ltd. and BofA Securities.

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