Budget 2020: Stocks to watch out for during FM Nirmala Sitharaman's speech

SUMMARY

"Make or break", "Do or die"... these are the phrases one hears in the build-up to every budget. This time around however the slowdown is very much real. Growth has slowed down to its lowest level in over six years and it's safe to say that Finance Minister Nirmala Sitharaman has her task cut out. Various sectors have made their proposals to her and the street expects some announcements on February 1 along these lines. Here are the stocks to watch out for during her speech.

By CNBC-TV18Feb 1, 2020 7:58:59 AM IST (Updated)

An increase in import duty on aluminium scrap will be a positive for Hindalco, Vedanta, Nalco

A cut in personal taxes and/or higher exemptions will be positive for HUL, Dabur, Colgate, Marico and Godrej Consumer

HUL, Dabur, Colgate, Marico, and Godrej Consumer will also benefit from initiatives to boost rural income and consumption

An increase in taxes on cigarettes is expected and this might be a near-term negative for ITC and Godfrey Phillips

Infrastructure status for healthcare delivery along with higher healthcare spend and, perhaps, universal health coverage plan will be positive for listed hospitals

Private engagement in Ayushman Bharat might be incentivised. Again a positive for Apollo Hospitals, Fortis Health, and Narayana Hrudayalaya

A liquidity window for easier availability of finance for housing companies might be on the anvil. Along with this, the government may increase allocation to AIF.

Existing and soon-to-be home buyers will be hopeful of an increase in deduction limits for housing loans. If announced, it will be positive for HDFC, L&T Finance, Can Fin Homes, LIC Housing Finance

The street is hopeful that the exemption limit for health/life insurance may be increased. Also, FDI limit may be hiked from 49% to 74% which will be a positive for ICICI Lombard, Max Financial, ICICI Pru, HDFC Life, SBI Life

The insurance companies might be hit by an increase in the tax rate from the present 12.5%. Negative for the above-mentioned companies

Stocks like Eris Life, Alkem, Torrent Pharma, Sun Pharma, Lupin, Cipla, Cadila may see an uptick if the government announces incentives for setting up API (bulk drug) units to trim China imports

It is expected that the government will announce steps to improve the financial sustainability of the power sector. The announcement of Atal Distribution System Improvement Yojana (ADITYA) will be read as a positive for stocks like Tata Power, Adani Power, Torrent Power, CESC, PFC, and REC

Apart from modernisation drives an increase in budgetary allocation for railways and metros will be a positive for Texmaco, RITES, ABB, Siemens, JMC Projects

The real estate will be hoping for incentives for the rental market along with increased deductions on interest on housing loans. Measures to address the liquidity crisis in the sector will give a fillip to DLF, Godrej Properties, Prestige Estates, Brigade Ent, Sunteck Realty and Sobha

Road construction companies like IRB Infra, Dilip Buildcon, NCC and Ashoka Buildcon will be hoping for a helping hand from FM Sitharaman. Infra spend may exceed Rs 5 lakh crore with a lot of it going to roads

An increase in reference price for steel imports might be announced. The environment cess of Rs 400/t may also be abolished which will be a positive for Tata Steel, JSW Steel, Jindal Steel & Power

The above-mentioned stocks will also benefit from a removal of import duty on coal, iron ore and copper concentrate

Telecom stocks will be hoping for a reduction of licence fee from 8% to 5-6%. Also on the anvil might be a cut in the import duty on telecom equipment, which stands at 20% currently.

Textile companies like Arvind, Vardhman Tex, Raymond, and AB Fashion will be hoping that Textiles Policy 2020 gets announced and thus help them compete with their global peers