By Atul Parakh
The 2024-25 Interim Budget, presented by Finance Minister Nirmala Sitharaman on February 1, 2024, has been acclaimed as a budget that prioritises national economic growth. This strategic plan aligns with the clear path for the advancement of several crucial sectors and industries, showcasing the government’s commitment to catalyse development and bolster economic prosperity in the upcoming months.
Infrastructure
Firstly, infrastructure development for nation-building seems to be the government’s top priority. The government has increased the allocation of the infrastructure sector to Rs 11.11 lakh crore in FY25, which will be 3.4% of the GDP. Three major economic railway corridor programmes will be implemented. These are energy, mineral and cement corridors, port connectivity corridors and high-traffic density corridors.
Companies engaged in these sectors may find enormous potential due to the government’s commitment to enhancing infrastructure development. In the last year, the Nifty Infrastructure index has shown an excellent performance and is up by 57.12% on a yearly basis. The Nifty Infra index gained 2,993 points, which showcases the growth of infra companies.
Cement Sector
The government’s emphasis on constructing roads, airports, ports, bridges, and other critical structures is expected to boost overall demand for cement. The infrastructure sector is projected to see a 15% year-on-year increase in total capital spending for the 2024 Budget. Companies engaged in the business of constructing roads, airports, ports, and bridges are likely to show increases in revenue and profits. Therefore, investors should keep the cement sector’s stock on their watchlist.
Power and Renewables
Many public sector unit companies that are engaged in the business of Utilities, Power and renewables have performed well in the last three quarters. The revenue growth and improved profitability have grabbed the attention of the investors. So, the government’s commitment to spending more on solar rooftops, Utilities, Power, and renewables is likely to boost the demand of the industry.
Due to that, the shares of companies related to this industry may continue to perform well. According to Budget documents, last year, the government spent Rs 2,167 crore on its rooftop solar power programme, and for 2024-25, it has budgeted Rs 4,555 crore.
Capital Goods, Consumer Durables, and Wires and Cables-related industries
Capital goods sector companies are engaged in manufacturing, distributing, and supplying machinery, equipment, and tools essential for business operations. The capital goods sector is the backbone of industries. It is about creating Indian machine tools that businesses need to function. In the Budget, the government keeps the capital goods sector in mind and focuses on the capex push, which will be one of the main drivers of economic growth.
Pharma and Healthcare
On our list, the fifth industry that stands to gain the most from the interim Budget 2024 is Pharma and Healthcare. The government plans to set up more medical colleges by utilising the existing hospital infrastructure. Moreover, the Finance Minister also said the government will encourage vaccination for girls in the 9-14 year age group for prevention of cervical cancer.
The Pharma sector anticipates increased budgetary allotment to the Promotion of Research & Innovation Programme (PRIP), encouraging innovation within the industry. The Nifty Pharma Index has also shown excellent growth in the last year. The Nifty pharma index is up by 55.26 on a yearly basis and registered a gain of 6,716 points. Investors are positive about the future of the pharma industry, and government focus on Healthcare has boosted their confidence.
The interim Budget for 2024-25 is good and growth-oriented. The five major sectors that can gain the most are infrastructure, cement, renewables, capital goods, and Healthcare. Other than this, industries like Power, Utilities, Railways, and Pharma are also in focus, which can see a rise in the overall demand.
(Atul Parakh is CEO at Bigul, the digital arm of brokerage Bonanza Portfolio . Views expressed are the author’s own. Please consult your financial advisor before investing.)