Stock Market Reaction on Budget 2018, Key Stocks to Watch

Within few minutes of Union Budget 2018 announcement, the Indian stock market went dizzy. The analysts predicted that it was an end of a bull-run, but later the Sensex recovered and optimism prevailed. Here are some highlights of the budget 2018 and how the different sectors in the stock market reacted to it.

The announcements like hike in the income tax cess and tweak in long term capital gain tax, created a furor in the market and resulted in a fall of Sensex by 463 points and Nifty by 148 points  or o.10%. By 3.24 the  Sensex fell by 58 points and after 4.30 it soared by 34 points to trade at 35,999 points, Nifty rise by 8 points to 11,036 points. Finally, it closed at 35,906 points, 58.36 points low and Nifty by 11,016 points, down by 10.80 points.

Real Estate Sector

After the implementation of GST, the real estate market in India went into the hibernation mode. The growth of the real estate sector lowered down from 7.5% to 6.6% and further tanked down to 4.4%. The big three policy initiatives like GST, demonetization and implementation of RERA induced repercussions and displeased the real estate players.

But after the announcement to establish a dedicated Affordable Housing Fund in National Housing bank and other measures to fuel the housing demand created a ray of hope in the real estate sector. Further announcement to create impetus to the already launched scheme Prime Minister Awas Yojana (under which it will offer home to rural and poor people at subside rates) was welcomed by the real estate sector.

Real Estate Stocks to watch for- Godrej Properties, DLF, India Bulls Real Estate

Education sector

Education is the building block of an economy. The Modi government wants to bolster the education sector and hence in his budget he has announced to set up various educational institutes. The budgetary expenditure on health, education and social welfare has been raised to 1.38 lakh crore, and there is proposal to open 24 medical colleges and introduce integrated Bed programs for the teachers to cater to the increasing demand. The government wants to fuel in digital drive; hence it plans to set up educational centers specifically dedicated to Artificial Intelligence.

Education Sector Stocks to watch for- Everonn, ACE EduTrend, EDUCOMP

Healthcare sector

India has always been on radar when it comes to health and fitness. India is a home to various chronic diseases like diabetes, cardiac and tuberculosis. The treatments offered in the hospitals are so expensive that it is beyond the common man pocket.

Hence, in order to make the treatment affordable Modi government has announced a historic healthcare scheme to cover 10 crore poor families. The 50 crore beneficiaries will get 5 lakh per family per year. This scheme is the world largest government funded healthcare scheme. This health care scheme is a huge step and would definitely help to promote Government mission of Swasth Bharat.

This scheme has further helped the hospital-centric shares to rally up by 5 percent.

Healthcare Stocks to watch: Apollo Hospitals

MSME Segment

A lot of expectations were raised by MSME segment including the financial problem. Though the government launched the Mudra scheme but it hardly addresses the financing problem of this sector. Such loans are available only to the micro enterprise engaged in manufacturing, processing and trading sector activities.

Hence to solve this problem, the government of India announced laid major impetus to financing of MSME segment, its growth and its role in providing employment to the people. Simplification of tax procedure and ease of compliance procedure to reduce regulatory framework are some steps taken.  The government further has announced a massive budgetary allocation to fund innovation is a welcome step.

SME IPO listing may attract some good gains with some boost in the budget.

Infrastructure Sector

The government has allocated extra budgetary support f Rs 5.97 lakh crore as against 3.96 crore in the last budget for the development of infrastructure sector.

Infra Stocks to watch: Bharat Electronics, L&T, Bharat Forge, Sadbhav, Ashok Buildcon, Cummins India, KNR Construction, Siemens, ABB India, Crompton Greaves

The major focus of the budget was on the rural economy and distressed farmers and this has  bring happiness among various companies like ITC, Hero Motor Corp,  Mahindra& Mahindra, JK Tyre, L& t, auto component makers are likely to gain from the hike in the custom duty.

Overall Reaction on Budget 2018

In a Populous,agrarian country,a Populist,Pre-election budget can be Pro-growth! I’m biased,since it ignites growth in our key rural https://t.co/2MyyA4b3HZ instead,I’ll laud the budget for health insurance for 10cr people.That’s a REAL step towards becoming a developed society.

— anand mahindra (@anandmahindra) February 1, 2018

After creating a knee jerk reaction, finally the budget dust has settled down and has brought sanity among the people. Though the market watchers are disappointed with the budget 2018 but it is believed that it is a balanced long term budget that would not dampen the investor sentiment and revenue growth. Stock Market seems to affirm its optimism based momentum with Modi government.

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