Budget 2017: Infra, housing to be in focus; see top stock picks

Analysts believe that this Union Budget 2017 will focus on reviving infrastructure and housing sector to offset the impact of demonetisation.

Dhirendra Tiwari and Dipojjal Saha analysts of Antique Stock Broking said, “FY18 budget in our view will set the tone for higher spending in both rural (roads + irrigation), urban infra (railways + roads) and affordable housing through the flagship schemes.”

They added, “Our top budget play is the infra and industrial sector which is also our key strategy overweight. We expect increased allocations towards defence, railways, urban and rural infra and utilities.”

Analysts expects a 20% year-on-year (yoy) growth in developmental expenditure which will be positive for the infra sector. 

An increased allocation to the rural development schemes will add up to 29% growth between Rs 1.5 lakh crore - Rs 1.6 lakh crore, including growth in MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) to Rs 45,000 crore - Rs 46,000 crore, they said.  

During last budget, the Union Cabinet hiked MGNREGA by over Rs 3800 crore taking the total allocation to Rs 38,500 crore under the scheme.

Antique said, “Both urban as well as rural housing is likely to be a key focus area of the budget over the next two years.”

For revival in housing, government's Pradhan Mantri Awaas Yojana (Housing) aims to construct 1 million houses from FY17-19 in the Economically Weaker Sections (EWS). Recently, Modi-led government expanded the shape of the PMAY scheme to include subvention for loans upto Rs 1.2 million as well. 

Antique said, “With stiff targets on both these programs for the next couple of years, a front loading of expenditure on housing can be expected.”

Antique's Budget top picks- SBI, BOB, HDFC Bank, Maruti Suzuki, Colgate, L&T, Siemens, BEML, Ashoka Buildcon, UltraTech, Tata Steel, NMDC, Hindalco and PowerGrid.

The duo said, "We expect increased allocations towards defence, railways, urban and rural infra and utilities. Cement and steel sectors will also be beneficiaries of overall higher spend in infra 
and housing. Further focus on affordable housing and push on cash-less payments will be a positive for the banking sector."