For an economy waiting for a consumption-driven boost, the Budget 2020 proved to be disappointing. Though the Budget had provisions to improve the conditions of living through provision of water and investment in health and well-being, there was no major immediate measure to boost disposable incomes. Incidentally, the word consumption did not at all occur in the Budget speech - reflective of the government's low priority on spurring consumption. The S&P BSE FMCG Index rose 1.85% at the end of the Budget - pulled up by stocks such as ITC, Dabur and Tata Consumer. With no change in the duty structure on cigarettes and tobacco, the ITC stock had a relief rally - soaring nearly 6%. In a bid to improve agricultural infrastructure and enhance farmers' remuneration, the Agriculture Infrastructure and Development Cess (AIDC) has been proposed on a small number of items such as petrol & diesel and liquor. Cess on fuel prices is certainly a negative for consumers - reducing their share of wallet on items of discretionary items of consumption. It is negative for market leader HUL.

Budget 2021 Impact on Healthcare sector Following the Covid crisis, Budget 2021 has been an outstanding budget for the country's healthcare sector. The immediate provisions include increased allocation towards healthcare expenditure and specific allocation for covid vaccination. There has been a 137% increase in the budgeted outlay for health and well-being to Rs 2,23,846 crore for the year 2021-22 against the current year's budgeted outlay of Rs 94,452. A large outlay of Rs 35,000 crore has been allocated for Covid vaccination for the year 2021-22 that could potentially. A new centrally sponsored scheme, PM AtmaNirbhar Swasth Bharat Yojana, will be launched with an outlay of Rs 64,180 crores over 6 years to develop capacities of primary, secondary, and tertiary care health Systems, strengthen existing national institutions, and create new institutions, to cater to detection and cure of new and emerging diseases. This will be in addition to the National Health Mission. The main interventions under the scheme are: support for 17,788 rural and 11,024 urban health and wellness centers; setting up of integrated public health labs in all districts and 3382 block public health units in 11 states; establishing critical care hospital blocks in 602 districts and 12 central institutions; strengthening of the National Centre for Disease Control (NCDC), its 5 regional branches and 20 metropolitan health surveillance units; expansion of the Integrated Health Information Portal to all States/UTs to connect all public health labs; operationalisation of 17 new Public Health Units and strengthening of 33 existing Public Health Units at the various points of entry - at 32 Airports, 11 Seaports and 7 land crossings; Setting up of 15 Health Emergency Operation Centers and two mobile hospitals Increased focus on healthcare spending - a long-pending demand of the healthcare industry - is a big positive for the healthcare industry. Hospitals stocks such as Apollo Hospital, Fortis Healthcare, Narayana Hrudayalaya and Max Healthcare as well as diagnostics stocks such as Dr Lal Pathlabs and Metropolis Healthcare have gained on back of these announcements.

In the past two quarters, the business in India's infrastructure sector has shown noticeable improvement. Thanks to the reforms of the government which eased liquidity in the sector, execution of roads projects has considerably improved. Execution of infrastructure projects by well-placed construction companies improved to 70-85% in the December 2020 quarter from 35-40% in the March 2020 quarter. In addition to this, reducing cases of Coronavirus-infected patients, availability of labourers at projects' locations, and returning of labourers who had migrated to non-urban areas ensured that the momentum in execution of projects is likely to continue. Also roads companies are seeing traffic growth in the range of 10-15% in the past two quarters as restrictions on movement of goods and people eased in key states. In the context of these facts, the announcements related to investments in the sector in the Union Budget have provided enough reasons for investors to increase their exposure in select stocks in the sector. The Budget has increased capital expenditure towards the sector to Rs5.54 lakh crore for FY22. This is a jump of 34.5% in its allocation when compared to FY21. Also under the National Infrastructure Pipeline (NIP), the government has increased the awarding of infrastructure projects for FY22. The government will award 7400 infrastructure projects for FY22 from 6835 projects in FY21. As regards, the Bharatmala Pariyojana Project, the government will be awarding additional 8500 km of national highway projects in the next one year. It must be noted that the government has already awarded 13000 kms length of roads projects under the Bharatmala Pariyojana Project. These announcements have come at a time most construction and roads companies are in better shape than a year ago. According to various estimates of analysts, the order book to bill ratio of well-placed construction companies is over 3. This means that the size of the order book of these companies provides visibility of revenues for at least three years. Also on the roads and highways projects, traffic growth estimates of analysts have changed. They estimate that traffic growth on key roads projects is likely to be in the range of 9-12% for the next few quarters. Given these facts, select and well-placed companies which have superior execution capabilities, light balance sheet and relatively higher number of financial closure of their projects are likely to see increased interest from the street. Companies which are likely to see increased interest from the street are KNR Constructions, PNC Infratech, Dilip Buildcon and Ashoka Buildcon. According to Bloomberg's estimates, these aforementioned companies are likely to show growth of 35-55% in their Earnings per Share (EPS) in FY22 in comparison with FY21, indicating high visibility of revenues growth in the coming quarters.

It was the day of stocks across the banking, financial services, and insurance (BFSI) sector amid the budget proposals to reduce the strain of bad assets, to bring in more foreign capital to insurance companies and to recapitalise the public sector banks (PSBs). During the budget speech, the finance minister proposed to set up an asset reconstruction company and an asset management company to consolidate and take over the existing stressed debt of public sector undertakings and then manage and dispose of the assets to alternate investment funds and other potential investors. The proposal catapulted the banking stocks at large. The bank Nifty index gained nearly 8% in the afternoon trade. With over 13% return in a single day, Indusind Bank was the biggest gainer in the index. The finance minister also proposed a recapitalisation of Rs 20,000 crore for PSBs for FY22. The government has infused over Rs 3.5 lakh crore in PSBs over the past few years including Rs 70,000 crore in FY20. The measure helped PSB stocks during Monday's trading. State Bank of India gained 10% while Bank of Baroda rose 8% from Friday's close. The proposal to increase the limit of the foreign direct investment (FDI) in insurance companies to 74% from 49% augurs well for the insurance sector which requires large amount of capital to expand business. A higher FDI limit is expected to play as a catalyst in the next growth phase of the sector. The proposal coincides with the government's aim to complete the IPO of LIC, the country's largest life insurance company, in FY22. The stocks of life and general insurance companies rose by 1-3% after the announcement of the proposal. In addition, credit demand is expected to remain high for FY22 given the government's intent to fund expenditure on infrastructure, public health and agriculture through market borrowings instead of direct taxes. This augurs well for the growth of the country's lending sector.

India's automobiles industry, which is one of the most important sectors in its consumption story, received enough attention from the Union Budget. The announcements in the Union Budget are likely to improve sales volumes in such a manner that the recovery in the sector will be swifter in the coming quarters than what was seen in the past two quarters. The two key budget announcements for the sector are new schemes for the public bus transport services and introduction of the voluntary scrappage scheme. The impact will be the highest on commercial vehicles followed by passenger vehicles. The government's new scheme will be launched at the cost of Rs 18,000 crore to support augmentation of public transport. The scheme will facilitate deployment of innovative public-private-partnership (PPP) models to enable private sector players to finance, acquire, operate and maintain over 20,000 buses. Despite the recovery in the several segments of the commercial vehicles, the recovery in the bus segment remains linked to rules of social distancing and complete halt of incremental buying by school, which is one of big contributors of new bus purchases. In the first nine months of FY21, sales of medium and heavy commercial vehicles dropped by 91% to 2,578 units according to SIAM data. The new scheme may reinvigorate the sales volumes of Ashok Leyland and Tata Motors. These companies are top players in the bus market in India. Beside this, the voluntary scrappage policy will strengthen the replacement buying of commercial vehicles. In the past two months, fleet utilisation has improved to 90-100% and stress on the financial fleet operators was not as severe as expected. According to industry estimates, there are about 17 lakh medium and heavy commercial vehicles, which are more than 15- year-old and plying without a valid fitness certificate. These vehicles are likely to generate incremental replacement demand.

Banking : Budgeted recapitalisation of PSBs largely in-line with our estimates for near term growth estimates assuming banks are able to reissue bulk of the AT1s which have call option due over the next 12 months. The proposal to divest two PSBs is expected to increase private sector participation and aid in improving credit delivery with better asset quality by providing much needed capital to public banks. Also, the proposed ARC/AMC is expected to result in faster and a better resolution of stressed assets of lenders. Apart from improving reported financials, this will also free up the bandwidth of management to focus on core lending operations.

NBFC : Continuation of credit support to the MSMEs in the form of guaranteed emergency credit lines and tax benefits for the buyers and builders in the affordable housing segment would have a multiplier effect and thus support the NBFC/HFC asset performance. Relaxation in the threshold under the SARFEASI Act to facilitate recovery from the stressed book. Extension of the partial credit guarantee scheme and proposal to set-up a development financial institution and an institutional framework for the corporate bond market would auger well with the lenders and should faciliate the much-needed liquidity and funding for the sectoral growth.

"In the last few years, the government has taken multiple measures to push digital payments in the country. By allocating Rs 1,500 cr for a scheme for financial incentives to boost digital payments and steps to support the development of a world-class Fin-Tech hub in India, will further drive digital payment penetration in the country."

The government has prioritised spending on growth at this stage, in the hope that such growth would help manage the fiscal deficit subsequently. A substantial increase announced in the expenditure on healthcare and infrastructure will help boost economic growth, including the MSME sector and generate employment. Overall, it was a growth-centric Budget aimed at securing India's long-term economic interest.

The focus of the Union Budget 2021-22 is to improve economic efficiency and infrastructure growth. Increased focus on infrastructure growth and capital expenditure will impact the overall growth of the real estate sector too. A good infrastructure could propel the development of real estate, both commercial and housing, along the transit corridors, highways and newly proposed airports.

This is surely an expansionary budget with a vision to spur capex, infrastructure & healthcare spending. The way forward for divestments, privatization & asset monetization looks promising. Going with a sharp correction into the budget, the street was enthused by the absence of negatives and an attempt to be focused on robust growth for key sectors & in turn boost economic growth. The market cheer was also led by an underlying pessimism on raising tax rates or taxing the super rich, which was prevailing in the market in the last couple of weeks, which did not materialize & was a pleasant surprise

""FDI in insurance from 49% to 74% is a key change, and this will help bring in more investments to scale up business in India. Prior to this change, insurance companies had to be Indian owned and controlled, and with the change foreign ownership and control will now be permitted with safeguards. There is also a proposal to have sufficient number of independent directors, given the sensitivity of the sector. Will help boost the sector particularly given the pandemic and the likely inclination for more insurance cover. FDI in insurance intermediaries has already been permitted upto 100%, so this was an expected next step to provide effective stimulus for the sector."