Friday 21 January 2022
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Stocks to invest in before Budget 2020-21

Based on our sources in the finance ministry, we are predicting a boom in the stocks of several sections of the economy quite confidently

Budget 2020-21 is round the corner. On the one hand, the government is preparing to present the budget; on the other, the market is preparing itself for potential announcements. What will transpire in Nirmala Sitharaman’s budget speech and what will not is a matter of speculation, but there are certain sectors that are bound to get the finance minister’s attention. We can thus advise our readers what stocks to buy before the budget.

These are some of the questions that investors are awaiting answers to. Today we are going to make the difficult calculations easy for you. We will tell you what announcements will be made in the budget. You will get an opportunity to know from experts how to do budget-buying.

In the budget, the government may make major changes in the related to the equity market. According to the exclusive information received from the sources, there may be an announcement to remove DDT in this reshuffle.

FMCG stocks that may accelerate

  1. HUL
  2. ITC
  3. Nestle India
  4. Dabur
  5. Godrej consumer
  6. Britannia
  7. Marico

Stocks to benefit from private investment in railways

In the budget, the financial support to the railways may increase by 10% to 12%. According to sources, the finance minister’s focus will be on increasing private investment in railways and increasing passenger amenities.

In the budget, the Railways had received an amount of Rs 65,873 crore for the financial year 2020. This budget is expected to get more than Rs 72,500 crore for the financial year 2021.

According to sources, an increase of 18% is possible in capital expenditure. The capital expenditure for FY 2020 was Rs 1.6 lakh crore.

Sources say that in the budget speech on 1 February, the focus will be on increasing private investment in railways and expanding infrastructure. The government also plans to improve 50 stations with private sector help.

The budget is likely to get large sums for track doubling and electrification. Apart from this, the work of installing CCTV at stations will be accelerated.

This news will speed up these railway-related stocks, which are as follows.

  1. Titagarh Wagons
  2. Texmaco rail
  4. Siemens
  5. ABB
  6. KEC International

Make in India-related stocks

Domestic companies that make solar panels, batteries, solar charging equipment may get relief from the budget. According to exclusive information from sources, the government may announce a financing scheme for the mega manufacturing plants.

According to sources, there will be some relief to firms in the manufacturing sector. The budget will boost solar panels, batteries and charging infra.

The finance minister may announce a financing scheme for a manufacturing plant, according to sources. They say a new financing model will be prepared for companies based on their investment.

A 20-25% capital subsidy is possible on plantations.

The Ministry of New and Renewable Energy (MNRE) may get an additional budget of Rs 5,000 crore. At the same time, the period of duty may be increased to prevent cheaper imports.

There is a demand to increase the safeguard duty on MNRE’s panel imports by 2 years. Safeguard duty expires in 2020.

Watch out for paper stocks

  1. JK Paper
  2. Star paper
  3. West coast
  4. TNPL

Footwear stocks may boom’

  1. Bata
  2. Liberty
  3. Relaxo
  4. Mirza International
  5. Khadim

Buy shares of tyre companies

  1. Ceat Tyres
  2. Apollo Tyres
  3. Jk Tyres
  4. Balkrishna Industries
  5. TVS Srichakra

Homebuyers to get relief

Expect more of this:

According to sources, income exemption on the of home loan may increase. There is a rebate of 2 lakh on interest under Section 24. On this, the housing ministry has recommended a discount of up to Rs 5 lakh.

Homebuyers may get a discount on interest during the construction works.

The exemption limit may increase on the principal of the home loan. The finance ministry is discussing the option of separate exemption on home loan principal according to sources. The home loan principal is exempt under Section 80C. The ministry is considering an exemption on investment in the real estate investment trust (REIT) under Section 80C.

Relaxation of capital gains conditions is possible under Section 54. Currently, capital gains exemption is limited to two houses. The limit of two houses and the duration of the investment may increase.

There have been several rounds of meetings between the Housing and Finance Ministry.

Real estate shares that may go bullish

  1. DLF
  2. Godrej Properties
  3. Oberoi Realty
  4. Prestige estates
  5. Brigade enterprises
  6. Sobha
  7. Mahindra Lifespace

Relief to NBFCs possible

There are plans to fund NBFCs through a special entity. The FM may announce the formation of this special entity as a special-purpose vehicle.

The government will enter its Specified Undertaking of the Unit Trust of India (SUUTI) stake in the SPV. The current market valuation of SUUTI is around Rs 33,000 crore.

The entity will be able to borrow thrice the value of the market. These special entities will be able to invest in select NBFCs. Invest 20% of the book value of NBFCs

Possible changes in slabs

In the interim budget that stopgap the then finance minister, Piyush Goyal, had presented:

According to the information we have, there may be a further relief in income tax. The present slab is 5% for income between Rs 2.5 lakh and Rs 5 lakh. The upper limit may be increased to Rs 7 lakhs.

Currently, a 20% is levied on income between Rs 5 lakh and 10 lakh. This may be changed to 10% from Rs 7 lakh to Rs 10 lakh.

In the current slab, if there is more than Rs 10 lakh income, there is 30% on it. This may be increased to 20% for an income between Rs 10 lakh and 20 lakh.

A 30% may be imposed for income between Rs 20 lakh to Rs 10 crore. There is a possibility of taxing people with an income of more than Rs 10 crore at the rate of 35%.

But chances of complete removal of LTCG are slim. LTCG relief is more likely. LTCG may be taxed after two years instead of one year.

VS Philip
Retired government servant and citizen journalist

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