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Does Budget help stocks in long run? Stocks that doubled since Budget 2017 have stories to tell

As the countdown for Union Budget 2018 begins, voices among investors are getting louder, as they try to zero in on rural-focused and infrastructure stocks hoping for Budget booster.

Last year's Union Budget was focused on improving domestic growth through investment in agriculture, rural development and infrastructure, even as it adhered to fiscal discipline and stressed on efficient tax administration.

Since February 1, 2017, when Finance Minister Arun Jaitley tabled his last Budget, a couple of stocks sectors likes textiles, auto, food processing, construction, finance and fertilisers have more than doubled investors wealth till January 15, 2018.

From the agriculture space, shares of GNFC and Chambal Fertilizers have soared 101 per cent and 123 per cent, respectively, while Meghmani Organics climbed 160 per cent to Rs 118.55 from Rs 45.60.

Value investor Dolly Khanna held over 1 per cent stake in GNFC as of December 2017, according to the shareholding data shared by the company on BSE. She was not among the shareholders who held more than 1 per cent in the company as of September 30, 2017.

Anand Rathi Financial Services expects the forthcoming Budget to contain some populist measures. Sectors that can benefit investors include agri-related, education, healthcare and affordable housing.

Farm equipment maker Escorts has also managed to deliver robust return to investors since last Budget. The scrip soared 112 per cent to Rs 804 as of January 15, 2018 from Rs 378 on February 1, 2017.

Shares of auto ancillary players Minda Industries, Endurance Technologies and Balkrishna Industries have risen 248 per cent, 114 per cent and 103 per cent in this period.

Minda Industries has plans to participate in the electric vehicles space. Group CFO Sudhir Jain says his company will play a very active role in the electric vehicle space when the time comes.

"We already have separate teams working on various components, studying them and exploring opportunities for collaboration with various OEMs. When the time comes, we will be fully geared to tap the opportunity," says he.

Brokerage IIFL says Minda Industries, through its new products, is expected to see a significant increase in content supplied per vehicle.

Realty stocks, which were among the top gainers of 2017, have also given handsome return to investors since last Budget, with Indiabulls Real Estate soaring 231 per cent between February 1, 2017 and January 15, 2018. Shares of Sunteck Realty, Sobha and Godrej Properties have risen 228 per cent, 121 per cent and 139 per cent, respectively, during this period.

The current government has done a lot for the real estate industry with some hard decisions such as demonetisation and the disruptive but very necessary RERA.

The industry now hopes for some benevolence in the coming Budget. This benevolence needs to go beyond improving personal finances and any implied booster to the real estate sector, says Anuj Puri, Chairman, ANAROCK Property Consultants.

Shares of infrastructure firm Dilip Builcon soared 288 per cent to Rs 945 as of January 15, 2018 from Rs 243 on February 1, 2017.

Jimeet Modi, CEO at Samco Securities believes PSU banks, low-cost home builders and infrastructure companies are likely to outperform the market in 2018 on the back of government-sponsored direct and indirect push for all these sectors.

Shares of food firms Avanti Feeds, Venky's (India) and Jubilant Food gained 350 per cent, 409 per cent and 114 per cent, respectively, since Budget 2017.

Consumer-oriented firms such as VIP Industries and Future Lifestyle surged over 100 per cent in this period. Shares of Bombay Burmah and Tata Global Beverages soared 182 per cent and 149 per cent, respectively, between February 1 last year and January 15 this year.

Textile and trading firms such as Raymond, Bombay Dyeing, Adani Enterprises and V-Mart Retail saw their shares jump 126 per cent, 415 per cent and 223 per cent, respectively.

Non-banking financial firms such as Dewan Housing Finance and Indiabulls Ventures soared 109 per cent and 1,203 per cent, respectively, since last budget, whereas broking firms such as Motilal Oswal Financial Services, Edelweiss Fin, JM Financial and Centrum Capital have soared over 100 per cent.

Rakesh Tarway, Head of Research, Reliance Securities, expects the government to announce measures to provide further boost to the rural economy through higher allocation towards MGNREGA and micro-irrigation funds, better coverage of Fasal Bima Yojana beyond 40 per cent.

This will not only help stimulate rural economy growth, but also drive rural consumption and in turn benefit sectors like consumers, building materials and white goods, he said.

He expects companies from the agro, FMCG, infrastructure development, building materials and railways sectors to be biggest beneficiaries of the forthcoming Union Budget.

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