Union Budget 2021 | Market cheers ‘Budget like never before’, 15 takeaways for investors

Union Budget 2021

Finance Minister Nirmala Sitharaman promised a Budget “like never before” and markets seem to think that she came good on her promise, with the equity benchmark zooming more than 2,000 points and the Nifty reclaiming 14,200 in the afternoon trade on February 1.

Experts say the Budget is growth-centric, with the minister’s focus on Atmanirbhar Bharat and job creation as she proposed to increase spending on infrastructure, healthcare, though raising fiscal deficit higher than the street’s target of 7-7.5 percent for FY21 is a bit of concern.

Experts gave thumbs up to the Budget that cheered markets as there was no wealth or super-rich tax, direct tax tweak, long-term capital gains tax, securities transaction tax or a COVID tax.

Here are 15 key takeaways for investors from the Union Budget 2021:

1. Finance Minister Nirmala Sitharaman announced a voluntary vehicle scrappage scheme in the Union Budget on February 1, bringing relief to the automotive sector.

Private vehicles will undergo fitness tests in 20 years and commercial vehicles in 15 years. “Details will be shared separately,” Sitharam said.

The announcement is seen as positive for the auto sector, especially for OEMs as it will push the demand for cleaner cars. Stocks like Maruti, Tata Motors, Mahindra & Mahindra may benefit in the long-run.

2. The FM announced a new scheme called the PM Atamanirbhar Swastha Bharat scheme to strengthen primary and secondary healthcare infrastructure.

The total outlay of this scheme will be Rs 64,180 crore over six years. Experts are of the view that this scheme will give a boost to the healthcare sector and stocks like Fortis Healthcare and Apollo Hospital may benefit.

3. The Urban Swachh Bharat scheme will be implemented with an outlay of over Rs 1.4 lakh crore, which will be positive for sanitary ware companies

4. The minister announced the introduction of a bill to set up a developmental financial institution with Rs 20,000 crore, which will be positive for infrastructure and real estate companies.

5. FY22 capex target raised to Rs 5.54 against Rs 4.39 lakh crore, a positive for capital goods and infrastructure companies such as L&T, ABB, Siemens.

6. Hundred more districts to be added to city gas expansion and independent gas transportation system to be set up. This is positive for gas companies like GAIL, IGL, MGL and Gujarat Gas.

7. FY22 PSU bank recapitalisation of Rs 22,000 crore is good for select PSU banks.

8. Sitharaman announced plans to set up a new asset reconstruction company (ARC) and asset management company (AMC) as part of a strategy to clean up banks’ balance sheets. This is a big boost to the banking sector, as banks can focus on new businesses and manage band loans effectively.

9. Agriculture credit to farmers of about Rs 16.5 lakh crore for FY22. This is beneficial for agriculture and allied sectors. Companies like Coromandal, Godrej Agrovet, UPL, M&M and Escorts likely to benefit.

10. The minister announced Rs 1,000 crore to solar energy corporation and Rs 1,500 to renewable energy development agency. This is positive for stocks from the green energy sector.

11. The government is targeting a fiscal deficit of 6.8 percent of gross domestic product (GDP) for FY22, which will gradually come down to below 4.5 percent by FY26. This will require amendments to the Fiscal Responsibility and Budget Management Act.

For FY21, the revised fiscal deficit estimate now stands at 9.5 percent of GDP, from a budgeted estimate of 3.5 percent. The total expenditure size for FY21 now stands at 34.5 lakh crore, up from Rs 30.4 lakh crore planned.

For FY22, the Centre will now spend Rs 34.83 lakh crore.

This is higher than what the markets were expecting. Ideally negative for banks, but considering the economic scenario, it would be taken in stride, said brokerage firm Religare Broking.

12. Giving a big boost to infrastructure projects, Sitharaman announced a National Bank for Financing Development (NaBFID) to help in the process of infrastructure financing in the country.

Realty, cement, housing finance companies and paint sectors may also gain as the announcements made on affordable housing may boost demand.

13. Gold and silver import duty to be rationalised. As per Religare Broking, it is negative for gold prices in the immediate short-term but positive in the long-term for gold demand outlook and will also curb illegal trade in gold and provide a boost to gems and jewellery industry. This was a long-standing demand of the industry.

Follow Moneycontrol’s Budget 2021 live coverage here.

14. The Union Budget 2021 has lined up Rs 3.05 lakh crore package to revive power distribution companies (discoms) through a revamped reform scheme.

This will end monopoly in the sector by giving options to consumers to choose from more than one discoms. Adani Transmission, Siemens, Adani Green Energy and BHEL? are among the stocks that can benefit from that.

15. The government has pegged the disinvestment target for FY22 at Rs 1.75 lakh crore. This will include the reduction of the Centre’s stake in two state-owned banks and a general insurance company, and large-scale asset sales.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

News Source:- Moneycontrol

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