Budget 2023 and Stocks it could affect

The Union Budget 2023 is coming up, and many people are already preparing for it. Some are making budget plans, and others are planning their investments. 

In this article, we'll look at some potential changes that could impact stocks in the near future. We'll examine how the government's policies might affect companies across a range of industries and provide a list of stocks that may be affected by the budget. 

So whether you're a novice investor looking for insights on the latest stock market trends or want to stay up-to-date on all the important news, this article is for you.

Before jumping into the expectation of the union budget 2023, let us see what happened last year in 2022 in the stock market.

Union Budget 2022: Winning stocks

The benchmark indices ended positively in a highly volatile session on February 1, 2022, as Finance Minister Nirmala Sitharaman presented the 2022-23 budget. Gains in metal, pharma and capital goods stocks saw the Sensex close 848.40 points, or 1.46%, higher at 58,862.57, and the Nifty 237 points, up at 17,576.85.

IndusInd Bank, Shree Cements, Tata Steel and Hindalco Industries were among the top Nifty gainers on Budget Day. Meanwhile, BPCL, IOC, Tata Motors, M&M and SBI Life Insurance were the top losers.

Among sector indices, auto and oil & gas were in the red, while bank, FMCG, capital goods, pharma, real estate, IT, and metal indices gained 1-5%. BSE midcaps and small-caps both gained 1%.

Union Budget 2023: Stocks can be positively affected

The Finance Minister will present the Indian Union Budget 2023 on February 1 2023. It will outline various measures and allocations for different sectors of the economy. These measures are likely to have an impact on the stock market. In this section, we will look closely at the sectors and stocks likely to be affected positively by the budget.

Automobile

The automobile sector has two wide distinctions in the industry, which are affected separately. The reason for this distinction is the GST levied on the outputs of these industries.

EV industry: The government may launch PLI schemes for battery manufacturers. Several media also stated that India has lower manufacturing of Lithium batteries, which makes EVs more expensive. Stocks of Amaraja Batteries and Excide Batteries have a high chance of excelling. 

EV Components: GST on EVs is 5%, but on EV components, it is 18%. So, We expect govt to reduce the GST from 18% to 5% on EV components. It can make vehicles cheaper. Company-specific like TATA Motors, TVS Motors, Hero Motocorp, and Ashok Leyland may see a rise in value. A fall in the GST levied on components will lead to reduced costs for the producer of the final products. If the levy on the finished goods remains unchanged, it would not negatively affect the final consumer's buying decision, which would mean that sales would not be affected either.

Defence & Transportation

Indian govt wants to focus on making more defence equipment & to export them. The government is likely to increase its defence budget. The defence sector stocks Bharat Electronics Ltd, BEL, Hindustan Aeronautics Ltd and Bharat dynamics will grow.

The Indian railways are expected to extend their railway lines, and capital expenditure on railways is likely to rise. It will likely benefit the stocks of LNP, KC Intl, and Kalpataru Power ltd.

Jewellery

Gold sees the heaviest import duty as soon as foreign-purchased gold comes into India. Its cost increases by 18%. Jewelers Association unanimously proposed to the Indian government to reduce the import duty on gold by 1-2%. Companies like Titan and Kalyan Jewelers are poised to benefit if it happens.

Healthcare

It is anticipated that the government will improve access to healthcare and create new healthcare facilities. This allocation is expected to benefit the healthcare sector, including companies involved in manufacturing and distributing pharmaceuticals, medical devices, and healthcare services. Stocks of companies such as Eureka Drugs & products, Poly-medicare, KIMS, Apollo Healthcare, Max Health Care, Narayana healthcare, Divi's Laboratories, and Dr Reddy's Laboratories are likely to increase in value in the coming months.

Renewable Energy

It is expected that the government may launch the National Recycling Policy to promote recycling in the renewable energy sector. These measures will benefit companies involved in manufacturing solar PV cells, modules, and solar storage batteries and recycling. TATA Power, Reliance Industries, NTPC, JSW energy, and Larsen Toubro are the stocks that are expected to grow.

Infrastructure 

It is hoped that the government to announce a massive allocation towards the infrastructure sector, which includes transportation, housing, water supply, and urban development. It will boost the construction and engineering sector and companies involved in transportation and logistics. Stocks of companies such as Larsen & Toubro, IRB Infrastructure Developers, and NBCC (India) will likely see an uptick in value in the coming months.

Banking and Financial Services

The budget may also announce several measures to support the banking and financial services sector, including increased lending to small and medium enterprises. This is expected to benefit stocks of banks and non-banking financial companies (NBFCs). Stocks of companies like HDFC Bank, ICICI Bank, and Bajaj Finance are likely to see an increase in value in the coming months.

FMCC Sector

The FMCG sector usually looks for policy measures and incentives in the Union Budget to boost consumer spending and increase demand for fast-moving consumer goods. FMCG stocks that will be benefited from these policies are Hindustan Unilever, Dabar, Emami, Marico, and Nestle India. 

The Bottom Line

The budget aims to balance the needs of different sectors and ensure inclusive economic growth, with a focus on increasing government spending in areas that would drive the stock market. While the decisions rolled out with the budget affect the economy and entire industries at large, certain companies and their stocks are affected more due to emotional price movement by the public.

Certain major economic events, like the budget, often lead the masses to engage with the stock markets based on speculations. These turn fundamentally strong stocks into traders' playgrounds. Thus, it is important that investors conduct proper research and rely on the company's operations when making a decision in regard to its stocks. Wild speculations might provide extraordinary returns, but these returns are not sustainable and, thus, must not be chased.

Disclaimer: The stocks mentioned in this article are not a recommendation by Finology and must not be taken as such. Consult a professional before making decisions regarding your finances.