Brokerage firms believe that the focus of the government in the union budget will be on measures to increase consumption. Finance Minister Nirmala Sitharaman can also announce a reduction in income tax on 1 February, as it will help in increasing congestion. In the second quarter of this financial year, GDP growth came down to 5.4 per cent. Economists have advised the government to take big steps in the budget to increase GDP growth. Brokerage firms say that the government measures to increase growth will have positive impact on some sector companies.
There will be measures to increase income in rural areas
Citi It has been said that the government’s focus in the budget will be on stopping the cyclical slowdown in the economy. The government can increase allocation for government schemes to increase the income of people in rural areas. This can benefit consumer staples and agricultural input companies. Philip CapitaL has expected a decrease in income tax rates in the union budget. He believes that the government can increase fertilizers subsidy. The government can provide financial assistance to insurance companies. Also, tax can be reduced on the premium of health and life insurance policy. This may boost shares of fertilizers, insurance and healthcare companies.
Demand will increase due to reducing income tax
Jefferies say that if the government increases the allocation for the welfare scheme, then it can have positive effects to companies associated with cement and rural economy. These include Bharti Airtel, Ultratech Cement and TVS Motor. The shares of these companies may show a boom. Both Jefferies and City say that if the government reduces tax for taxpayers with Rs 10 lakh to 20 lakh annual income, then it will increase demand. This can benefit companies like Jubilant Foodworks, Devyani International, Trent, V-Guard, Havells and Maruti Suzuki India.
There will be measures to increase employment opportunities
Axis Securities estimates that the government’s focus in the budget will be on creating employment opportunities. The government can announce help for those sectors that have the ability to create more jobs. This will benefit companies associated with infrastructure and consumer. Jefferies estimates that the government may bring sub-component manufacturing under the PLI scheme. This can benefit companies like Syrma SGS, Kaynes Tech and Amber Enterprise.