21 Stocks to benefit from upcoming union budget 2024-25; Are you holding any? 

Jefferies Group stands as a prominent player in the realm of comprehensive investment banking and capital markets services. Offering a spectrum of offerings including capital markets facilitation, financial advisory services, institutional brokerage, securities research, and asset management, the firm caters to diverse client needs. 

The upcoming union budget for the fiscal year 2024-25, set to be announced in July, could benefit several domestic sectors such as affordable housing, capital expenditures, consumer goods, and rate-sensitive industries, according to a report by Jefferies. 

The brokerage anticipates a decline in bond yields, predicting the government will target a 5.0% fiscal deficit for FY25, given the ample financial headroom. 

Additionally, the fall in yields is expected to be supported by increasing Foreign Portfolio Investment (FPI) flows into debt following the inclusion of Indian Government Securities (G-Secs) in global indices and a recent upgrade in India’s sovereign outlook by S&P. 

However, the report also noted that the IT and pharmaceutical sectors might not see significant positive catalysts. 

Income tax relief: Jefferies, the investment bank, anticipates a substantial income tax relief that could benefit the consumer sector due to an expected cut in income taxes. 

According to their report, “The government’s potential fiscal flexibility, buoyed by robust income tax collections, may facilitate a significant (Rs 50,000 crore) reduction in income taxes.” 

Jefferies elaborated that this measure could target middle-class individuals earning between Rs 10-15 lakhs annually, which would have a positive impact on companies in consumer discretionary, telecom, passenger vehicle manufacturing, and consumer durables sectors. The report lists the specific stocks highlighted by Jefferies.

Interest subsidy scheme: 

Jefferies anticipates that the government will reintroduce the interest subsidy under the Credit Linked Subsidy Scheme (CLSS) for urban housing. This move could benefit lenders specializing in affordable housing, as listed in the table below.

Sectoral Capex: 

A capex budget is expected to see a substantial increase, with an expected rise of Rs 0.3 trillion, representing a 20% year-over-year growth, which would provide reassurance to contractors and capital goods companies. This development would particularly benefit Larsen and Toubro. 

Rural Infrastructure policies: 

The non-capital welfare costs could potentially increase by around Rs 0.5 trillion. It is anticipated that the government’s health insurance scheme will encompass all senior citizens. Furthermore, substantial improvements in rural infrastructure and welfare could yield benefits for rural stakeholders. 

“We expect a reduction in the borrowing target as well, which should be positive for rate-sensitive sectors such as property developers and non-banking financial companies (NBFCs),” the brokerage said. 

Borrowing: Jefferies also anticipates a decrease in the borrowing target, which is expected to benefit rate-sensitive companies such as real estate developers and Non-Banking Financial Companies (NBFCs). 

Taxation and Regulation: 

According to Jefferies, if tobacco taxation changes lower than 5-7% could benefit ITC. However, stricter regulations in the Futures and Options (F&O) trading markets could present challenges for traders and investors in the sectors. 

Written by Omkar Chitnis

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