HDFC Life, SBI Life, ICICI Prudential Life, Container Corp to BEML II Impact of Budget Announcements highlights Motilal Oswal

Motilal Oswal highlights that the Government to increase FDI from 49% to 74% in insurance, this announcement will be positive for HDFC Life, SBI Life, ICICI Prudential Life in Insurance sector.

Finance Minister Nirmala Sitharaman on Friday proposed to amend Insurance Act, 1938 to increase FDI limit from 49% to 74% in insurance companies, and allow foreign ownership and control with safeguards during Union Budget 2021. Nirmala Sitharaman on Monday proposes a sharp rise in capital expenditure for the next fiscal to ₹5.54 lakh crore, from ₹4.39 lakh crore in the current financial year.

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Also, the Finance Minister highlighted divestment in  2 state run banks and PSUs – Container Corporation, IDBI Bank, BEML (Bharat Earth Movers), LIC IPO in FY22. No increase in excise duty is positive for OMCs like HPCL, BPCL and IOC which should react positively on this news. Digital Promotion and Jobs promotion announcements in budget will be positive for Info Edge. Also, Gold and Silver customs cut from 12.5% to 7.5% is positive for Titan in the jewellery segment.

Infra stocks surge after Finance Minister raises capital expenditure. Road builders such as KNR Constructions and NCC are gaining 7% - 8%. The BSE Realty index rose over 3.2%. The government will capitalise the DFI with Rs 20000 crore, allowing it to leverage debt of up to Rs 5 lakh crore in three years to provide much-needed financing to the capital-starved sector.

The minister also announced a massive push into asset recycling, a fund-raising route the government has experimented with in the last few years that allows it to raise funds by privatising public infrastructure assets and directing the proceeds into new large infrastructure projects.