Budget 2020 India: Finance Minister Nirmala Sitharaman will present her second Union Budget on February 1, 2020. On account of Union Budget presentation, next week is going to be the longest trading week and stock markets will be open for normal trading. "The upcoming week will be dominated by Union Budget but global cues and December quarter earnings will also have some impact on the market, Santosh Meena, Senior Analyst, TradingBells said. During Budget run-up, the stock markets are expected to be volatile mainly due to the earning season. "Till budget, the market would be volatile, not due to budget but mainly because of earning session. While many banks are showing a rise in outstanding NPAs several manufacturing companies are posting yoy net profit growth mainly on account of lower taxes. Hence, volatility in several individual stocks and overall movements of benchmark indices would continue till budget," G.Chokkalingam, Founder and CIO, Equinomics Research & Advisory Pvt Ltd said.
A tweak in income tax slabs, relaxation in long term capital gain (LTCG), relief in dividend distribution tax (DDT), are among the common expectations from the Union Budget 2020. For instance, a tweak in personal income tax will provide more disposable income in the hands of the taxpayers. "This particular move can have a positive impact on all consumer-related companies stocks," Nirmal Bang said in a research report.
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The Budget expectations from the pharma sector include "job creation initiatives through spending on agriculture, infra projects and incentives for rural India. These will lead to employment, demand generation and aid rural recovery. These may prove positive for the consumer companies with higher rural sales mix such as Hindustan Unilever, Dabur India, Colgate-Palmolive India, Marico and Emami," Nirmal Bang said
While, if the investors are looking to buy stocks during Budget run-up then "High dividend-yielding stocks will be a good bet before the Budget since any tweaks in the personal tax space will improve chances for these stocks to soar," Nirali Shah, Senior Stock Analyst, Samco Securities said. "Coal India, Vedanta, ONGC, Oil India should be considered before the Budget from a dividend yield perspective," Nirali Shah recommended.
Finance ministry had announced Rs 25,000 crore special window for affordable and middle-income group housing segment. "Budget is likely to reiterate further provision and structure this fund will help the stuck projects to come out of the wood," Pritam Deuskar, Fund Manager, Bonanza Patil said. The brokerage has recommended Kolte-Patil Developer (Stop loss- Rs 229, Target price- Rs 320), LIC Housing Finance (Stop loss- Rs 408, Target price- Rs 580) and AAVAS Financiers (Stop loss- Rs 1,900, Target price- Rs 2,250).
There are high chances that the government will announce measures or fund allocation to provide support to infrastructure, power and agriculture sectors. "Investors can look at Coromandel International, Godrej Agrovet, Rallis India, L&T, KEC international, Tata Power, PGCIL," Ajit Mishra, VP – Research, Religare Broking Ltd said.