Budget 2024: FM announces higher capex outlay, fiscal deficit target; these stock & sectors in focus

Finance Minister Nirmala Sitharaman tabled the interim budget for the year 2023-24 on Thursday, where she proposed to push the provisional capital expenditure (capex) outlay for the financial year 2025 to Rs 11.11 lakh crore, up by 11.1 per cent.

The FM had announced a capex outlay of Rs 10 lakh crore for the year 2022-23 in her previous union Budget 2023 speech, increasing 37.4 per cent. The proposed capex would be 3.4 per cent of India's GDP.

Pradeep Gupta, Co-founder & Vice-chairman, Anand Rathi Group said that increase in India's infrastructure spending, aligning closely with the nominal growth estimate. "However, to address the challenges of deteriorating infrastructure, India must consider a more substantial increase in investment rather than a reduction," he said.

As expected, the interim budget did not usher any surprises with no myopic measures announced. The government continued with its focus on infrastructure and increased the capex outlay by covering railways, ports and aviation sectors, said Swapnil Shah, Director-Research at StoxBox.

The improved capex outlay will benefit the companies from defence, infrastructure and construction sector as well. Key features of the budget are focus on tourism, logistics and innovation in research.

PSU stocks, particularly the from the railway, travel & tourism and infra sector are likely to remain at focus. The list may include names like IRFC, Ircon, Railtel, IREDA, Engineers India, IRCTC, Bharat Dynamics, BHEL and Hindustan Aeronautics among others saw buying on Thursday

From the private sector pack, stocks Jupiter Wagons, Texmaco Rail, Oriental Rail, Olectra Greentech Easy Trip Planners, Zen Technologies, Data Patterns, Paras Defence, Indian Hotels, Yatra Online attracted interest from Investors following the budget announcements.

The Modi government 2.0 aims to make India a ‘Viksit Bharat’ or a developed nation by 2047, within 100 years of independence. In continuation to this, the reduced fiscal targets suggest that the government will be borrowing less and more funds shall be available for the private sector.

Sitharaman also revised the estimate of the fiscal deficit to 5.8 per cent of GDP, improving on the budget estimate, notwithstanding moderation in the nominal growth estimates. The government intends to reduce the fiscal deficit below 4.5 per cent by the financial year 2025-26, while it has pegged the fiscal deficit in 2024-25 is estimated to be 5.1 per cent of GDP.

"The gross and net market borrowings through dated securities during 2024-25 are estimated at Rs 14.13 and Rs 11.75 lakh crore respectively. Both will be less than that in 2023-24. The private investments are happening at scale, the lower borrowings by the Central Government will facilitate larger availability of credit for the private sector," said Sitharam in her speech.

The government has walked the tight rope and followed a further fiscal consolidation path by promising to manage its finances well for FY25, said Shah from StoxBox. "Our overall reading is that the government has shown prudence in managing the various facets of economy and remains committed to the long-term vision of making India a developed economy by 2047" he said.

ticking to fiscal responsibility with a lower fiscal deficit which could be music to the ears of foreign investors and impending $25 billion bond inclusion in June as lower budget deficits and paired borrowings will help bring down yields. It could possibly open the door for a ratings upgrade, said Gupta from Anand Rathi Group.

The move is likely to support banking and financial stocks. Following FM's commentary, state-run lenders rebounded from early losses and turned higher, while private lenders also posted recovery, but could not erase the entire losses. The Nifty financial service pack was trading flat.

From the PSU Bank space, Bank of India, Punjab & Sind Bank and Uco Bank surged about 3 per cent, while Union Bank, Indian Bank and Bank of Baroda were other key gainers. In the private sector banking space, only HDFC Bank, Axis Bank and IndusInd Bank were trading in green. Insurance stocks were key gainers from the financial services pack.

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