Stocks, sectors you must avoid post Budget 2017

Last Updated: Thu, Feb 02, 2017 18:48 hrs
A man looks at a screen displaying news of markets update inside the Bombay Stock Exchange (BSE) building in Mumbai

Budget 2017 offers hikes in government spending and cuts in taxes as Prime Minister Narendra Modi promises to help the poor and to win back the votes of those hit by his crackdown on "black money".

Finance Minister Arun Jaitley announced increases in spending on rural areas, infrastructure and fighting poverty, and sought to assure lawmakers and voters that the economic impact of the government's cash crackdown would wear off soon.

The following sectors/companies look set to be hit by the proposals in Budget 2017:

Potential losers

* Autos - The auto sector received no clarity on incentives for manufacturing electric and other clean fuel vehicles and scrapping old vehicles. Limiting cash transactions to Rs 300000 is likely to hurt car sales, especially luxury vehicles. The auto component sector had hoped to have tax incentives on research and development reinstated.

This is likely to disappoint car makers like Tata Motors, Maruti Suzuki and Mahindra & Mahindra. Major auto part makers are Bharat Forge, Motherson Sumi Systems and Bosch Ltd.

* Oil industry - Development levies for oil and gas companies were expected to come down but did not, a potential blow for Oil and Natural Gas Corp and Oil India Ltd.

* Electronics - Jaitley levied an additional duty of two percent on populated printed circuit boards, which account for up to 50% of a smartphone's manufacturing cost. The aim is to push assembly of such boards in India and cut imports. This is likely to push up prices of imported mobile phones that are assembled in India.

* Large corporates - Jaitley reduced corporate tax only for small and medium businesses, giving little benefit to India's large conglomerates. He has also levied a 10 percent surcharge on individuals earning between Rs 5 lakh and Rs 10 lakh.

* Manufacturing - the manufacturing sector was hoping for a boost from a cut in rate of the minimum alternative tax and incentives for capital investment but there was no reduction.

($1 = 67.5625 Indian rupees)

(Compiled by Aditi Shah, reporting by India Company News Team; Editing by Ruth Pitchford)

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