Union Budget 2023 Expectations for Stock Market Investors: Which Sectors Can Benefit?

 

• Finance Minister Nirmala Sitharaman to present Union Budget on Wednesday, February 1, 2023

Finance Minister Nirmala Sitharaman will present the Union Budget on Wednesday, February 1, 2023, which will be the last full budget of the present government before the general elections in mid-2024. The government is expected to support capex, infrastructure creation and import substitution to ensure higher gross domestic product (GDP) growth in the coming years.

“In the last 4 years, we have not seen relaxation in income tax slabs for the public, we can expect some relaxation this time, the pre-poll budget will also include spending for the rural economy, which has been facing stress since last 1 year tax, populist welfare schemes, and spending on health infrastructure. The focus will be on growth. Manufacturing as a trend has been successful through various policies including PLI, it should see further expansion," said Divam Sharma, Founder, Green Portfolio.

Also, as we expect a capex cycle in the coming years and as the government looks to attract manufacturing capex, industrial parks, concessions for manufacturers, spending on infrastructure creation should be on the radar. Renewable energy will be on the radar to reduce the cost of energy to GDP, ensure energy security and reduce the burden of imports. Sharma said this would be taken forward through concessional announcements related to solar, public transport, EVs.

“The world has seen the importance of energy security and lower energy cost as a percentage of GDP. Companies offering distribution, production, equipment and services related to EPC will benefit the infrastructure and allied sectors including EPC, cement, steel considering the push by the government to build infrastructure. Manufacturing-related (PLI) sectors, especially textiles, pharma, automobiles and chemicals may benefit from further thrust by the government. Defense manufacturing will be on the radar. We expect the government to encourage local manufacturing and exports of defense equipment."

Upcoming budget likely to increase rural/agri expenditure by $10 billion, a 15% increase over FY2023, and likely to maintain double-digit growth in public capex by 20% in current fiscal , given that elections are due in the country in mid-2024, according to a note by UBS India.