Finance Minister Nirmala Sitharaman is set to present the Union Budget on Saturday, February 1, a day that will also be a regular trading session for the stock markets. The budget is expected to bring announcements aimed at driving growth, boosting consumption, and providing tax relief for the middle class. These measures will influence various stocks across multiple sectors, as detailed below.
Infrastructure: Continued Government Emphasis
Infrastructure investment has been a major focus in recent budgets, and the government is expected to maintain its commitment to higher spending in this sector. According to a note from Jefferies, if government capital expenditure (capex) growth falls below 15%, it could have a negative impact on engineering, procurement, and construction (EPC) contractors such as Larsen & Toubro (L&T) and the broader industrial sector.
Key stocks to watch:
- L&T
- IRB Infrastructure
- Dilip Buildcon
- KNR Constructions
- PNC Infratech
- KEC International
- Ahluwalia Contracts
- HG Infra
- GR Infra
- NCC
Renewable Energy and Power Sector Expectations
The government is likely to reinforce its focus on clean energy, with a strong push toward renewables, battery storage, small nuclear reactors, and pumped storage projects. A strategic roadmap for hard-to-abate industries is also expected, according to Morgan Stanley.
Jefferies has noted that any modifications in import duty structures for solar modules and cells will be crucial.
Stocks to watch in the power generation space:
- NTPC
- Tata Power
- JSW Energy
- NHPC
- SJVN
- CESC
- Adani Power
- Adani Energy Solutions
- KP Energy
Renewable energy sector stocks:
- Tata Power
- NHPC
- Suzlon
- Waaree Renewables
- Sterling & Wilson
- Premier Energies
Transmission sector stocks:
- Power Grid
- Indigrid INVIT
- Power Grid INVIT
Healthcare: Focus on Infrastructure and R&D
There is a strong possibility of increased budgetary allocation for healthcare infrastructure, particularly in rural and semi-urban regions. Additionally, greater support for research and development (R&D) through tax incentives would be beneficial for the pharmaceutical industry.
A production-linked incentive (PLI) scheme for anti-diabetic and weight-loss medications is expected to have a positive impact on leading pharmaceutical companies.
Pharma stocks to watch:
- Sun Pharma
- Cipla
- Dr. Reddy’s
- Biocon
The potential enhancement of the Ayushman Bharat scheme with increased budget allocation and expanded treatment coverage could be a downside for hospitals, as they may be required to treat patients at lower prices.
Hospital stocks to monitor:
- Apollo Hospitals
- Max Healthcare
- Aster DM Healthcare
- KIMS
- Jupiter Hospitals
A reduction in customs duties on life-saving drugs is anticipated to benefit the healthcare sector overall. Medical device manufacturers are expecting standardization of Goods and Services Tax (GST) rates at 12% across all devices, as well as improved export incentives.
Medical device companies to track:
- Poly Medicure
Medical Tourism and Affordable Housing Prospects
Any potential announcement regarding low-cost financing through tax incentives for both existing and new medical tourism projects would be positive for hospital stocks.
Beneficiaries in the hospital sector:
- Apollo Hospitals
- Max Healthcare
- Aster DM Healthcare
- KIMS
- Jupiter Hospitals
Additionally, an announcement related to affordable housing—including the potential relaunch of subsidy schemes such as the Credit Linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY)—would enhance affordability and support the real estate sector.
Housing finance stocks to observe:
- Aadhar Housing Finance
- Aptus Value Housing Finance
- Aavas Financiers
- Home First Finance
Furthermore, a potential increase in the deduction limit for home loan interest and principal payments, coupled with a reduction in GST rates for construction materials, particularly cement, would be beneficial for real estate developers.
Key real estate stocks to monitor:
- Godrej Properties
- DLF
- Prestige Estates
- Macrotech Developers
With the Union Budget 2025 set to unveil key policy directions, investors should keep a close watch on these sectors and stocks. The government’s continued focus on infrastructure, clean energy, healthcare, and affordable housing could create significant market movements. The specific tax and policy measures announced on February 1 will be crucial in determining the performance of these industries in the upcoming fiscal year.
Also Read: Will Indian Stock Market Be Open Tomorrow For Union Budget 2025?
