News

Unlocking Budget 2024: JM Financial’s Insights on Stock Market Impacts and Key Sector Opportunities

February 10, 2025
Smart Money

Budget 2024 Expectations: JM Financial Outlines Wish List and Potential Stock Impacts

As India prepares for its 2024 Union Budget to be presented by Finance Minister Nirmala Sitharaman on July 23, expectations are high regarding the government’s approach to balancing fiscal deficit, capital expenditure (capex), and social welfare initiatives. JM Financial, a prominent brokerage firm, has released insights into anticipated allocations and their implications for key sectors and stock market performance.

Balancing Economic Growth and Social Welfare

JM Financial anticipates that the upcoming budget will focus on maintaining a balance between fiscal deficit and growth-oriented capital expenditures aimed at economic expansion and social uplift. The firm expects the government to uphold an ambitious capex agenda, previously announced at ₹11.1 lakh crore for the fiscal year 2025. This investment is projected to be directed towards critical sectors such as infrastructure, railways, defense, and renewable energy, supporting the vision of ‘Viksit Bharat’ (Developed India) by 2047.

The continuation of current policies, particularly in boosting job creation and reviving the rural economy, will be crucial components of the budget strategy. Furthermore, JM Financial indicates that retaining the current capital gains tax structure would be beneficial for the Indian stock market, calming potential investor concerns.

Key Areas of Investment and Stock Reactions

Rural Economy and Welfare Initiatives

JM Financial highlights the government’s potential use of a record ₹2.11 lakh crore dividend from the Reserve Bank of India (RBI) to enhance welfare measures. Expected increased allocations for welfare programs such as the Pradhan Mantri Awas Yojana (PMAY) and financial support for farmers under PM Kisan could significantly impact the rural economy, promoting consumption and growth.

Sector-Specific Impacts

Agriculture and Fertilizers

A substantial fertilizer subsidy of ₹1.64 lakh crore is projected to support the agriculture sector, along with investments in technology adoption and storage infrastructure. Stocks such as Coromandel International, Chambal Fertilizers, and PI Industries may see a positive response from these budget measures.

Automobile Sector

Decisions to stimulate rural spending through subsidies could benefit companies focusing on rural markets like Mahindra and Mahindra and Hero MotoCorp. Increases to the FAME-III subsidy could provide a boost to electric vehicle manufacturers and ancillary services.

Banking, Financial Services, and Insurance (BFSI)

Measures aimed at enhancing affordable housing, particularly in semi-urban and rural areas, are expected to benefit housing finance companies like Aavas Financiers and Home First. Additionally, enhancing fund flows to the renewable energy sector could positively affect companies like REC and PFC.

Cement Industry

JM Financial notes that additional allocations to PMAY aimed at constructing millions of rural homes will be favorable for cement stocks such as UltraTech Cement and Ambuja Cements.

Fast-Moving Consumer Goods (FMCG)

If the government announces tax cuts or adjustments to tax-saving investment limits, it could result in increased disposable income, positively impacting FMCG giants like Hindustan Unilever and Nestle. Conversely, an increase in excise duties on tobacco products may negatively affect companies such as ITC.

Defense and Infrastructure

Investments in defense capital expenditures and railway infrastructure enhancements are expected to boost stocks associated with Bharat Electronics and Hindustan Aeronautics, alongside construction firms like KNR Construction and PNC Infratech.

Conclusion

The anticipated Union Budget 2024 reflects a strategic approach by the government to promote economic growth while addressing social challenges. JM Financial’s insights provide a framework for potential market movements and stock performance in response to specific budget announcements. Investors and industry stakeholders are keenly awaiting the proposals that will shape India’s economic landscape in the coming fiscal year.

As the date approaches, the focus will remain on how these measures will integrate into broader economic strategy and improve the overall financial ecosystem in India.