The five-day-long onslaught of the post-Budget wealth erosion for equity investors saw only 47 stocks of BSE 500 index bucking the trend. In fact, these handful of companies, largely from FMCG, cement and auto sector, generated a wealth of Rs 16,942 crore against an overall erosion of about Rs 201,261 crore for the Sensex, a SundayET analysis reveals.
Stocks such as Tube Investments of India, ITC and Marico gained by 11%, 10% and 9% respectively in the post-budget rally against a decline of 9% shown by the Sensex during the same period. Tube Investments of India is the second largest bicycle manufacturer of the country and a beneficiary of increasing income of people living in rural areas.
Significantly, all those 47 stocks were laggards in the rally that started in March, 2009, as they gained only 46% till the last trading session before the Budget, whereas the other set of 453 stocks in BSE-500 gained as high as 80%. The gains by this companies, most of which have a huge rural presence, could be attributed to the generous budgetary allocation to the rural sector. The allocation to the National Rural Employment Guarantee Act (NREGA) increased by 144% to Rs 39,100 crore. Also, Rs 2,000 crore has been allocated to the Rural Housing Fund.
Stocks such as Tube Investments of India, ITC and Marico gained by 11%, 10% and 9% respectively in the post-budget rally against a decline of 9% shown by the Sensex during the same period. Tube Investments of India is the second largest bicycle manufacturer of the country and a beneficiary of increasing income of people living in rural areas.
Significantly, all those 47 stocks were laggards in the rally that started in March, 2009, as they gained only 46% till the last trading session before the Budget, whereas the other set of 453 stocks in BSE-500 gained as high as 80%. The gains by this companies, most of which have a huge rural presence, could be attributed to the generous budgetary allocation to the rural sector. The allocation to the National Rural Employment Guarantee Act (NREGA) increased by 144% to Rs 39,100 crore. Also, Rs 2,000 crore has been allocated to the Rural Housing Fund.
Allocation towards rural road scheme has gone up by 60%. Bharat Nirman also saw 45% more allocation. Irrigation programmes are also going to get higher allocation. According to Amitabh Chakraborty, president equity at Religare Securities, the Budget was positive for rural India, and also for the agriculture sector. Tax benefits such as 100% deduction on capital expenditure in warehousing and cold chain facilities, have improved the investors’ sentiments for the FMCG sector.
Another sector that saw an upturn in the post budget rally is cement. Major cement companies such as Ambuja Cements and Ultratech Cement gained 6% and 3%, respectively in the last five trading session only. According to Mr Chakraborty, the government seems to have shifted its focus on rural housing and infrastructure construction. Also, the investment towards the Commonwealth Games went up to Rs 3,472 crore, which would create more demand for cement. Auto majors too are not far behind.
Hero Honda Motors and Maruti Suzuki India gained around 5% each. Hero Honda and Maruti Suzuki gained as they have huge presence in the rural areas. Hero Honda Motors enjoys almost 40% of the rural two-wheeler market. Similarly, there is a huge demand of smaller cars in the rural areas and Maruti Suzuki is the largest player in this segment.
The major losers, significantly, were in the education sector, which made an impressive gain in the pre-Budget rally. Companies such as NIIT, Aptech and Educomp Solutions lost around 27%, 21% and 16% respectively. According to Mr Chakraborty, however, there is a huge potential in the education sector but companies, which are going to be benefited are not many in the listed space. The government’s focus is expected to be mainly on the primary education space. I V Subramaniam, CIO at Quantum Advisors, believes that the education sector did not perform post-Budget mainly due to lack of any major announcement in the finance bill.
Infrastructure stocks, which sold like hot cakes in the March rally also did not remain favourites of investors in the post budget rally. Larsen & Toubro, Simplex Infrastructures, Reliance Infrastructure and GMR Infrastructure were all down by 11-20%.
Stocks such as Tube Investments of India, ITC and Marico gained by 11%, 10% and 9% respectively in the post-budget rally against a decline of 9% shown by the Sensex during the same period. Tube Investments of India is the second largest bicycle manufacturer of the country and a beneficiary of increasing income of people living in rural areas.
Significantly, all those 47 stocks were laggards in the rally that started in March, 2009, as they gained only 46% till the last trading session before the Budget, whereas the other set of 453 stocks in BSE-500 gained as high as 80%. The gains by this companies, most of which have a huge rural presence, could be attributed to the generous budgetary allocation to the rural sector. The allocation to the National Rural Employment Guarantee Act (NREGA) increased by 144% to Rs 39,100 crore. Also, Rs 2,000 crore has been allocated to the Rural Housing Fund.
Stocks such as Tube Investments of India, ITC and Marico gained by 11%, 10% and 9% respectively in the post-budget rally against a decline of 9% shown by the Sensex during the same period. Tube Investments of India is the second largest bicycle manufacturer of the country and a beneficiary of increasing income of people living in rural areas.
Significantly, all those 47 stocks were laggards in the rally that started in March, 2009, as they gained only 46% till the last trading session before the Budget, whereas the other set of 453 stocks in BSE-500 gained as high as 80%. The gains by this companies, most of which have a huge rural presence, could be attributed to the generous budgetary allocation to the rural sector. The allocation to the National Rural Employment Guarantee Act (NREGA) increased by 144% to Rs 39,100 crore. Also, Rs 2,000 crore has been allocated to the Rural Housing Fund.
Allocation towards rural road scheme has gone up by 60%. Bharat Nirman also saw 45% more allocation. Irrigation programmes are also going to get higher allocation. According to Amitabh Chakraborty, president equity at Religare Securities, the Budget was positive for rural India, and also for the agriculture sector. Tax benefits such as 100% deduction on capital expenditure in warehousing and cold chain facilities, have improved the investors’ sentiments for the FMCG sector.
Another sector that saw an upturn in the post budget rally is cement. Major cement companies such as Ambuja Cements and Ultratech Cement gained 6% and 3%, respectively in the last five trading session only. According to Mr Chakraborty, the government seems to have shifted its focus on rural housing and infrastructure construction. Also, the investment towards the Commonwealth Games went up to Rs 3,472 crore, which would create more demand for cement. Auto majors too are not far behind.
Hero Honda Motors and Maruti Suzuki India gained around 5% each. Hero Honda and Maruti Suzuki gained as they have huge presence in the rural areas. Hero Honda Motors enjoys almost 40% of the rural two-wheeler market. Similarly, there is a huge demand of smaller cars in the rural areas and Maruti Suzuki is the largest player in this segment.
The major losers, significantly, were in the education sector, which made an impressive gain in the pre-Budget rally. Companies such as NIIT, Aptech and Educomp Solutions lost around 27%, 21% and 16% respectively. According to Mr Chakraborty, however, there is a huge potential in the education sector but companies, which are going to be benefited are not many in the listed space. The government’s focus is expected to be mainly on the primary education space. I V Subramaniam, CIO at Quantum Advisors, believes that the education sector did not perform post-Budget mainly due to lack of any major announcement in the finance bill.
Infrastructure stocks, which sold like hot cakes in the March rally also did not remain favourites of investors in the post budget rally. Larsen & Toubro, Simplex Infrastructures, Reliance Infrastructure and GMR Infrastructure were all down by 11-20%.
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