Top Stocks to Watch After India's 2024 Budget Announcements

Less than a week is now left for the announcement of Union Budget 2024, Nirmala Sitharaman will be giving a presentation on the budget roadmap this coming Monday, July 23. As every year individual taxpayers are counting on the government to reduce their tax burden by introducing a new income tax regime. India is on the way to becoming the third-largest economy in the world and it is expected to be on track the new budget will capitalize on capital expenditure, especially on infrastructure, to drive GDP growth.

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The Indian stock market is expected to be constant following the Union Budget 2024 unless the budget grossly disappoints by hiking the capital gains tax rate or surprises on bold reforms, we think the narrative of the market will be decided by the earnings growth hereon. If the government wants to lift up the market it needs to focus on fiscal consolidation, consumption boost, and capex spending, Measures to bolster rural income, wages, and consumption would initially drive up sales for retail and small-ticket white good companies with follow-on impact on FMCG in the later stage.

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Markets are likely to respond favorably to targeted spending that drives growth in these critical sectors. Anuj Bajpai, Co-founder and CEO, of Liquide, “Prioritize investments in sectors poised to gain from the budget. Consider stocks like M&M, L&T, Ultratech Cement, Chambal Fertilisers, Ircon, BEL, Reliance Industries, PFC, NTPC, Dabur, HUL, and Aavas Financiers. Additionally, park funds into defensive sectors like FMCG, Healthcare, and Utilities, which typically maintain steady performance through different economic cycles.”

Global Equity Strategist at Jefferies Christopher Wood said "that there should be no capital gains tax in the current scenario in India ahead of the Union Budget presentation by finance minister Nirmala Sitharaman" he added, "there should be a restructuring of the taxes and substantial variations in tax rates between short-term and long-term investments should be implemented."

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