The Indian stock markets jumped up by several points on February 1, 2022, welcoming Union Finance Minister Nirmala Sitharaman’s budget announcement. Stocks in specific sectors like metal, pharma and healthcare gained the most, considering the various positive measures announced for these sectors. There were also many positive announcements pertaining to infrastructure, telecom, defense, jewelry, agriculture, etc. Stock market experts are now bullish on many of the country’s sectors following the budget announcement.
If you are an investor and are wondering which sector will be the most attractive in 2022, here is all the information you need.
The FM Nirmala Sitharaman announced a big boost for the infrastructure sector in the country with an allocation of Rs. 7.5 lakh crores for capital expenditure in the year 2022-23. This means a 35.4% rise from the Rs. 5.54 lakh crores that was allocated to capital expenditure in the previous year. Here are some important points to note on upcoming plans for this sector:
- Investments have been planned in:
- remote roads,
- mass transit in cities and
- 400 new “Vande Bharat” trains to be launched in the next three years
- Infrastructure industry, along with its supporting industries like cement, real estate, metal, labor, etc would benefit with the allocation granted in the budget.
- Investment boost will benefit major infrastructure players in the country.
- The cement and construction industries, which are considered as allied industries to infrastructure, are slated to benefit from the government’s plan to build additional houses for low-income groups across cities.
The government will allocate Rs. 600 billion towards:
- piped water supply for 38 million homes and
- logistics, which will aid some of India’s leading metals producers
The government announced plans to introduce the digital rupee starting 2022-23, which will be:
- based on blockchain technology
- issued by the Reserve Bank of India (RBI).
This move is to make the currency management system more efficient and cheap. Additionally, post office accounts will now be brought under the coverage of core banking.
These moves will give a boost to the banking sector’s credit growth and benefit both banks and non-banking financial companies (NBFCs). Approximately 1.5 lakh post offices will now come under the core banking network and nearly 35 crore post office deposit accounts will form part of the central banking and payments set-up.
During the 2022 budget, FM Sitharaman proposed setting up of 75 digital banking units across 75 districts by scheduled commercial banks (SCBs). This will help in aggressively promoting digital payments across the country and further push for financial inclusion. Post the budget announcement, digital finance service providers across India are slated to see major expansion.
EV battery makers
Through the budget, the FM pointed out the government’s plans to promote clean transport technology. With the new swapping policy announced for electric vehicles, battery makers are slated to gain majorly.
Some of the beneficiaries that can expect significant business growth include Amara Raja Batteries Ltd. and Exide Industries Ltd.
The budget allocated additional Rs. 19,500 crores to the PLI scheme and clean energy, specifically for manufacturing of equipment pertaining to solar power. This will boost business for companies like IEX, Borosil renewable and Tata Power. The allocation also aims to cover solar modules for boosting local manufacturing.
Telcos and data centers
With the launch of 5G auctions this year, the telecom sector is set to get a fresh boost. The government also announced categorization of data storage as part of infrastructure spending.
As per the budget announcement, the government plans to earmark 68% of the defense sector’s capital expenditure for local companies. The FM said that defense research and development will now be opened up for participation from startups, industry, and academia as 25% of the defense R&D budget is planned to be earmarked for the same.
Amid lingering economic uncertainties, both in India and globally, finance minister Nirmala Sitharaman, through her budget speech, emphasized on prioritizing growth as compared to fiscal consolidation. Most of the budget decisions are expected to sharply expand the capital and infrastructure spending for the upcoming fiscal year. Needless to say, some of the biggest beneficiaries include infrastructure companies and ancillaries. Other sectors that will remain in focus will be renewable energy & biofuels, education and healthcare.
With existing tax benefits extended by another year, allowing participation in defense manufacturing, and bringing the LTCG surcharge of unlisted companies in line with listed companies, the budget 2022 announced multiple benefits for startups in the country.
Budget 2022 announced a tax of 30% on gains made from cryptocurrency investments. This will help in eliminating the ambiguity on such investments and is expected to bring stability to such investment avenues.
No changes were announced to the income tax slabs in Budget 2022. Therefore, the applicable taxation on income will remain the same as last fiscal year.
The MSME sector will benefit from the extension of the emergency credit line until 2023, as announced in the budget 2022.
E-passports will be issued starting from 2022-23, which will focus on futuristic technology to allow faster reading, small silicon chips with 64 KB space, and holder’s data will be stored on the chip.