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The Baseline
01 Feb 2023
Budget 2023 Live Analysis

Budget 2023: Winners and Losers

  • Sector/Industry Sector Change 1 Year Sector Change 1 Year Budget Impact
    Telecom -1.48% -0.96% Increase in government spending in telecom infrastructure from Rs 3,010 crore in FY23 to Rs 10,400 crore in FY24. However, telecom stocks traded in red as the Centre also increased its non-tax revenue collection target from telecom companies by 30% to Rs 89,469 crore. Telecom Services closed 1% lower in trade today.
    Life Insurance -16.99% -9.2% Life insurance stocks fell more than 9% in trade today after the Centre announced that all income earned from life insurance policies (excluding unit-linked insurance plans) with a premium of above Rs 5 lakh will be taxable. This is applicable post-April 01, 2023. Insurance companies are now worried that high-premium products will face slow demand. Major stocks like SBI Life Insurance, HDFC Life Insurance, Life Insurance Corp and Max Financial fell in trade today.
    Real Estate -8.41% -1.06% Much needed boost for infrastructure development both directly and indirectly. The Finance Minister (FM) has laid out Rs 10,000 crore for urban infrastructure development, with Rs 79,000 crore dedicated to PM Aawas Yojana - a housing development project. FM also specified that infrastructure will be one of the top three priorities. Increased capex will boost growth in these sectors. The index Nifty Realty however pared its gains and closed 0.94% lower in trade today.
    Banking 6.68% -0.35% Banking stocks declined post the budget announcement. The budget deficit of 6.4% is higher than historical trends. As government borrowing increases, it sucks liquidity from commercial banks as banks are the biggest market for government bonds. Banks have been reeling with agriculture loans and MSME loans. The government has raised the agriculture loan target to Rs 20 lakh crore. MSME emergency credit line was not fully utilized in FY23. The allocation has been brought down to Rs 14,000 crore from earlier Rs 15,000 crore.
    General Industrials 29.8% -1.34% The Centre has raised capex budget by 33% for FY24 with a special focus on railway infrastructure. This may attract higher private investments and start a new capex cycle. This bodes well for the order books of capital goods makers especially those which get business from Indian railways, manufacturing, power generation, defence and construction industries. Stocks in focus: Timken India, Siemens, Rail Vikas Nigam, Cummins, HAL, Bharat Electronics, CG Power, ABB India
    Agrochemicals / fertilizers 47.14% -2.67% The majority of fertilizer stocks ended up negative post-budget announcement. The government has cut down the budget allocation of urea subsidy from Rs 1,54,098 crore (revised estimates) for FY23 to Rs 1,31,100 crore in FY24.
    Pharmaceuticals -0.1% -0.33% Indian pharma companies’ reactions to the Union budget unveiling were mixed. Finance Minister Nirmala Sitharaman said that the Centre will encourage the pharma industry to invest in research and development in priority areas. The impact of this on pharma companies will be dependent upon the priority areas or segments that the Centre will decide to focus on. With regard to the allocation to major schemes, the Centre has allocated Rs 1,250 crore (Rs 100 crore in FY23) for the Pharmaceutical department as per FY24 budget estimates.
    Defence 49.5% -5.43% All 11 companies in this industry fell post-budget announcement after an early trading session rally despite a 13% increase in the Indian defence budget to Rs 5.94 lakh crore in FY23. This could be due to a less-than-expected increase in the capital outlay, which is mainly used to buy defense equipment. Capital outlay rose only 6.3% YoY to Rs 1.63 lakh crore. A slowdown in capital outlay growth momentum could hurt the order book growth of fast-rising defence companies. However, an already strong order book could help offset this; The focus falls back on the execution of orders going forward.
    FMCG 10.64% -0.14% FMCG stocks rose as the Finance Minister announced plans to boost agricultural production. The Centre set an agriculture credit target of Rs 20 lakh crore and has announced various schemes to help farmers, fishermen and agricultural credit societies. However, the FMCG sector lost most of its gains by the end of today’s trade and closed flat. Although a surge in production may ease supply constraints to a certain extent, the focus still remains on cost pressures due to commodity prices still at elevated levels.
    Hotels, Restaurants & Tourism 16.85% 1.09% Hotel and Tourism stocks rallied in intra-day trade as the Finance Minister announced the promotion of tourism through government programs and public-private partnerships. At a time when demand for travel has almost recovered to pre-Covid levels, this Centre's focus on tourism is likely to push travel demand up in the coming years.

  • The Centre cuts food, fertilizer and fuel subsidy spends by 28% to Rs 3.74 lakh crore (estimated) for FY24.

  • The Centre cuts back spending on rural jobs guarantee schemes in the Union Budget. Also, customs duty has been revised in the import of parts for mobile phone manufacturing, seeds used in lab-grown diamonds, and open cells of TV panels.

  • Finance Minister, in her budget, has extended the date of incorporation for startups to avail tax benefits to March 31, 2024, from March 31, 2023. The FM also proposes the benefit of carrying forward losses on change of shareholding for startups to 10 years of incorporation from the current seven years.

  • Finance Minister proposes to remove the minimum threshold of Rs 10,000 on TDS and increase the rebate limit to Rs 7 lakh per year from Rs 5 lakh.

  • The government has a capex of Rs 35,000 crore for energy transition investment. Finance Minister Nirmala Sitharaman says that battery storage will get viability gap funding. The government also remodels the credit guarantee scheme for MSMEs with an investment of Rs 9,000 crore, reducing the cost of credit by 1 percentage point. This will come into effect from April 1.

  • Finance Minister announces an investment of Rs 75,000 crore for transport infrastructure projects in steel, ports, fertilizer, coal and foodgrain sectors, with Rs 15,000 crore coming from private sources. Iron & Steel/Interm.Products and Fertilizer industries trade in the green.

  • The fiscal deficit for 2022-23 stands at 6.4% of GDP. Finance Minister says that it will fall to 5.9% in 2023-24.

  • The government reduces more than 39,000 compliances and decriminalises more than 3,000 legal provisions to improve the ease of doing business.

  • Indian Railway Catering & Tourism Corp and Rail Vikas Nigam rise as Finance Minister Nirmala Sitharaman announces Rs 2.4 lakh crore capital outlay for railways.

  • Finance Minister Nirmala Sitharaman says the Centre’s capital outlay towards infrastructure development rises 33% to Rs 10 lakh crore. She adds that Rs 2.4 lakh crore will be allotted towards railways.

  • Finance Minister Nirmala Sitharaman says that India's per capita income has grown to Rs 1.97 lakh crore.

     

  • The Centre is focused on increasing jobs for the youth and enhancing the agriculture sector by bringing modern technologies.

  • The Centre will bear the complete expenditure of Rs 2 lakh crore to ensure Food Security. Finance Minister Nirmala Sitharaman says that agriculture credit will be enhanced to Rs 20 lakh crore.

  • Hotel stocks rise as the Centre announces support for the tourism industry. 

  • Rupee gains 12 paise against the US dollar to Rs 81.76 per dollar in early trade today, ahead of the Union Budget.

  • Economic Survey reveals that direct income has risen by 26%. The survey also suggests that borrowing costs will continue to remain high as rate tightening cycle may last for a longer period. India’s core sector output has also increased by 7.4% in December 2022.

  • The government's tax revenue is expected to exceed budget estimates by Rs 4 lakh crore on higher income tax and customs duty. The Centre's planned capex for this fiscal year is Rs 7.5 lakh crore, compared to Rs 5.5 lakh crore last fiscal. Industries such as infrastructure, defence and logistics are expected to see a boost in funding.

  • India’s manufacturing PMI falls to a three-month low of 55.4 in January, compared to 57.8 in December 2022. However, the reading remains above 50 for the 19th consecutive time.

  • Reports suggest that nominal GDP growth in FY23 will be around 15.4%. The real GDP growth will be around 7% and is likely to come down to 6-6.5% in FY24.

  • The domestic market looks forward to more disposable income for the middle class and a reasonable disinvestment target from the Budget. The market will also focus on the defence, railways and capital goods sectors.

  • Minister of State Finance, Pankaj Chaudhary, says that the 2023-24 budget will accommodate the expectations of all sections of society. Pradeep Misra, CMD – REPL, adds that infrastructure spending is likely to go up by 10% of GDP in the upcoming budget. Infrastructure spending will boost employment and generation of capital in the economy.

  • Finance Minister Nirmala Sitharaman will present the last full budget of this government today. According to Economic Survey, India’s GDP growth is expected to be in the range of 6-6.8% for 2023-24. The Centre also plans to reduce the fiscal deficit and bring it to the level of 5.8-5.9% from 6.4%.

 
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