L&T, Ircon, HUDCO, Uno Minda, HAL: Analysts’ top stock and sector picks ahead of Budget 2024

The Union Budget 2024 is fast approaching, with Finance Minister Nirmala Sitharaman presenting the first full-time budget on behalf of Modi 3.0. However, this will be the first time since 2015 that the BJP will not be in power alone and will not have a majority, and Indian stock markets will be in full swing.

With the assurance of continuity in government policies, the new government is likely to push rural consumption to combat rising inflation. Many brokerages and analysts, participating in Business Today’s Budget Survey, have suggested a number of stocks and sectors that are likely to benefit from the upcoming union budget and announcements.

Lowering inflation without causing too much collateral damage to the economy and labor markets. Although inflation has fallen from its peak, it is still well above target, Tata Mutual Fund said in its latest report.

A balanced portfolio strategy has been proposed to leverage different pockets of strong earnings recovery and prospects. The fund house sees growth drivers across investment cycles, energy, capital goods and real estate.

Narendra Solanki, Head Fundamental Research at Anand Rathi Shares and Stock Brokers, is bullish on the consumption theme and has picked FMCG, consumer, autos (2-wheelers), auto accessories, agriculture and rural sectors that are expected to do well. He is also bullish on Infra and manufacturing as a theme, picking ITC, Varun Beverages and Minda Corp as his key picks.

Manish Chowdhury, head of research at StoxBox, is positive on stocks like Housing & Urban Development Corporation (Hudco), IRCON International and HAL.

Hudco is projecting a 15 per cent annual growth in loans from FY24 to FY30, driven by government agency contracts and focus on high-yielding infrastructure assets, looking ahead to improving financial metrics and strong government support in the NBFC sector, it said. “IRCON is presenting a solid order book of Rs 27,208 crore and strong financial performance with 17 per cent ROE,” Chowdhury added.

Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities, said that the auto ancillary services sector has reported excellent financial performance in Q4 FY24. “We believe that the earnings momentum will continue going forward. Our top picks in this space are Lumax Auto Tech, Uno Minda and Endurance Technology,” he said.

Trivesh D, COO, Tradejini has picked Larsen & Toubro (L&T), IRCTC, Hindustan Aeronautics (HAL) and Bharat Electronics as his key budget picks. However, he suggested investors to stay away from overheated pockets like the SME space

Nishit Master, Portfolio Manager, Axis Securities PMS, feels that infrastructure, capital goods, defence and agriculture equipment sectors will be the focus in the budget. “On the other hand, the IT sector is not expected to get any major benefit in the budget,” he said.

Ravi Singh, Senior Vice President, Retail Research, Religare Broking: is positive on public sector companies, defence and railways as the government is focusing on capital formation, boosting the domestic manufacturing sector, reducing dependence on imports and upgrading existing infrastructure.

Shrey Jain, founder and CEO of SAS Online, an Indian discount broker, did not recommend any particular stock, but believes select stocks from the textile, chemical and agro-processing sectors are expected to perform well in the short to medium term.

Nitasha Shankar, Head, Equity Strategies, YES Securities, is positive on infrastructure and ancillary services, housing and construction materials, agri-related sectors like tractors, agro-chemicals, automotive and ancillary services, PSU sector and power sector focused on green and clean energy as the key themes of the budget.