Budget 2024: Best Equity, Investment and Thematic Funds to Invest in to Earn Big Returns; Expert Recommends Investment Strategy

Updated on Jul 6, 2024, 09:20 IST

Given the expected increase in government spending on defence sector, companies like Bharat Electronics Limited (BEL) and Hindustan Aeronautics Limited (HAL) could see significant growth.

As the Union Budget 2024 approaches, focusing on sectors that are likely to benefit from government policies could yield promising investment opportunities.

As the Indian market hits new highs, investor confidence in the country’s economy continues to grow. This optimism is fueled by the stable, growth-oriented policies of the current government led by Prime Minister Narendra Modi. Both foreign and domestic institutions have increased their investments, further strengthening the market.

With the Union Budget for 2024 due to be presented in the next session of Parliament, likely to begin on July 22, the focus is expected to be on several key sectors: defence, infrastructure, housing development, finance, railways, engineering and green energy projects.

Investment expert Priyanshu Mishra, Managing Director, Blue Bell Capital Pvt. Ltd., has analysed the best equity investment ideas, including stocks and mutual funds, that could prove to be promising investments ahead of the Budget announcement.

Budget 2024: Promising sectors for investment

1. Defense: With government spending in the defense sector expected to increase, companies such as Bharat Electronics Limited (BEL) and Hindustan Aeronautics Limited (HAL) is poised to see significant growth. These companies can benefit from both domestic orders and export opportunities.

2. Infrastructure: The infrastructure sector is always a big part of the budget, and potential winners include Larsen & Toubro (L&T), IRB Infrastructure and GMR Infrastructure, which are poised to benefit from increased government spending on public projects and urban development.

3. Housing development: As the government pushes for affordable housing, stocks like DLF Limited, Godrej Properties and Phoenix Mills could be attractive. These companies have a strong presence in both residential and commercial real estate.

4. Financing: Banks and non-bank financial institutions (NBFCs) such as HDFC Bank, Canara Bank, Power Finance Corporation (PFC) and Bajaj Finance could benefit from policy measures aimed at boosting credit growth and financial inclusion.

5. Railways: With the expected investment in rail infrastructure, companies like IRCTC and Rail Vikas Nigam Ltd., IRFC are likely to see growth. These stocks are well-positioned to capitalize on modernization and expansion projects.

6. Engineering: The engineering sector, home to players like Siemens India and ABB India, is set to benefit from increased spending on industrial and manufacturing projects.

7. Green Energy Projects: As India transitions towards renewable energy, companies involved in solar, wind and other green energy projects such as Adani Green Energy, Tata Power and JSW Energy present promising investment opportunities.

Budget 2024: Investment Fund Strategies

In terms of mutual funds, thematic and sector funds are trending due to significant investor interest. New fund offerings (NFOs) in these categories have seen significant inflows, reflecting confidence in the growth potential of specific sectors. However, these funds carry higher risks compared to diversified mutual funds.

Thematic and sector funds

1. Defense sector funds: Funds focused on the defense sector could benefit from increased government spending. However, they require careful consideration given their concentrated exposure. Here is a new fund in this area: Motilal Oswal Nifty India Defense Index Fund.

2. Infrastructure funds: Given the government’s focus on infrastructure, funds like ICICI Prudential Infrastructure Fund could perform well.

3. Green Energy Funds: As renewable energy projects gain popularity, it is worth considering funds like the SBI Magnum Equity ESG Fund.

4. Energy and Infrastructure Fund: Energy and infrastructure sector funds such as Nippon India Power & Infra Fund.

5. Banking and Finance: It focuses on the financial sector, including banks and NBFCs such as Aditya Birla Sun Life Banking & Financial Services Fund

Priyanshu Mishra added that thematic and sector funds should be a small part of a diversified portfolio. These funds are required to invest more than 80 per cent of their capital in a specific sector or theme, which can lead to high returns if the sector does well but also pose significant risks if it doesn’t. To limit the risk, it is advisable not to allocate a large percentage of your portfolio to these funds. Instead, one should maintain a diversified portfolio and have the patience to stay invested for the long term.

As the Union Budget 2024 approaches, focusing on sectors that are likely to benefit from government policies can offer promising investment opportunities. While stocks in defence, infrastructure, housing, finance, railways, engineering and green energy are poised for growth, thematic and sector funds offer targeted exposure at higher risk. A balanced, diversified portfolio with a small allocation to these high-potential sectors can provide both stability and growth potential in a changing market landscape.

(Disclaimer: The recommendations, suggestions, views and opinions of experts are their own. They do not reflect the views of TN Network.)