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Without much fanfare, the budget did a good balancing act between conflicting objectives including investment-led growth promotion and fiscal consolidation. We expect infra, construction, building material and hospitality companies to be key beneficiaries.

Delivering in a tough environment.

The Union Budget is presented in the midst of global economic slowdowns. With the highest growth and low inflation versus peers, India stands out as a beacon of hope. The budget has achieved a balance between competing aims, including fostering growth while retaining fiscal consolidation, relieving taxpayers while bringing in healthy revenue growth, and favouring investment without discouraging consumption. The budget has concentrated on sustaining India's rise in the global economic order.

Infra, construction, building material, hospitality key beneficiaries, durables, too, positively impacted

. The second consecutive sharp increase in budgetary outlay on infra and continued focus on affordable housing would be positive for infra, construction and building material companies. Select durable goods (like ACs) and wire and cable manufacturers also set to gain. Customs duty restructuring would aid certain durables and appliances (e.g., LED bulbs, TVs, chimneys). The focus on tourism is a huge plus for hospitality.

Auto sector stands to gain.

Substantial fund allocation under the green hydrogen mission, viability gap funding for energy storage, old vehicle scrappage by governments are key positives. Greater funding to adopt hybrid and EV and increased funding under the PLI scheme are also significant. Customs duties have been altered to encourage domestic production. We expect a near-term positive impact on M&H CV manufacturers.

Mixed bag for financials.

Large capital outlay, focus on housing under the PMAY, relief and continued guaranteed loans to MSME would positively impact banks, housing companies and MFIs. However, measures relating to high-value real estate, taxation of returns from life insurance and taxation of MLDs could be negative for certain NBFCs and life insurers.

Positive for most consumer-oriented, rural demand-based sectors.

Adjustments in personal income tax and support for the rural economy would be positive for consumer-oriented sectors such as FMCG, consumer electronics and consumer retail. The higher tax on cigarettes is small, likely to be easily passed on and turn out to be positive for these companies. The inducement for lab-grown diamonds might impact margins for jewellery companies.

Other sectors largely neutral.

We expect little direct impact of the budget on sectors such as chemicals, IT, oil & gas and pharma. Real estate is a mixed bag with positives for affordable housing and negative to neutral for others.

Budget picks. Purely based on the budgetary measures our key picks (alphabetically) are Amber Enterprises, Ashok LL, Indian Hotels, ITD Cementation, ITC, KNR Constructions, NCC, PNC Infratech, Tata Motors and Ultratech.

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