The Indian equity market has scaled new highs after the Union Budget 2021-22 boosted optimism over the country’s economic growth. The market rally was also fuelled by sustained foreign capital inflows, upbeat December quarter corporate earnings so far, positive developments over coronavirus vaccine and strong global cues.

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Analysts believe this market rally to continue backed by improving fundamentals and a better economic outlook steered by the budget.

"The budget has improved the outlook for the Indian economy. This will benefit the cyclical sectors. The domestic-oriented companies will do well going ahead. The banks' valuations are good while the auto sector provides a good opportunity," said Vinod Nair, head of research at Geojit Financial Services.

Nair is of the view that investor focus will now shift from expensive IT, pharma and FMCG sectors to domestic-oriented infrastructure, construction, auto and realty sectors.

"These cyclical sectors will tend to do well going ahead," Nair said.

With the government’s stern focus on increasing domestic production and making the country 'self-reliant' with its 'Atmanirbhar Bharat’ theme, there lie immense opportunities for domestic-oriented companies, Nair believes.

In addition to this, the Budget’s emphasis on infrastructure development will be beneficial for construction and real estate companies.

Also Read:

Budget unveils opportunities; earnings to guide path going ahead

Here are top stock picks from Vinod Nair among sectors:

Among private banks, Nair likes HDFC Bank and Kotak Mahindra Bank, while among the state-run lenders, he picked State Bank of India. According to Nair, the valuations of PSU banks are cheap and attractive.

The budget proposal of increasing Foreign Direct Investment (FDI) limit in the insurance companies (life and general) to 74 percent from 49 percent will be positive. HDFC life Insurance Company and ICICI Lombard General Insurance Company are his top picks fro this sector.

Among auto space, Nair is positive on Tata Motors and Ashok Leyland, while in the infrastructure sector, he likes PNC Infratech and KNR Constructions.

(Edited by : Jomy)