In line with market expectations, the government went ahead with the populist measures in the last Budget of its five-year tenure to please farmers and middle-class section. While rural schemes and increase in the income tax slab to Rs 5 lakh per annum, got a thumbs up, upward revision of fiscal deficit to 3.4 per cent was slightly above the target.
"This is a dream budget for the middle class and for farmers. With the increase in exempted income, increase in standard deduction, increase in limit for TDS etc. we can expect more disposable income in the hands of the people, "said Mr G Pradeepkumar, CEO of Union Asset Management Company.
The outlay for farmers should go a long way in reducing the stress in the agriculture sector. Mutual funds can also expect more inflows because the salaried class can use the extra disposable income for investments. Overall, the budget is very positive for the stock markets, G Pradeepkumar added.
The budget has given a big boost to the urban and rural incomes. Hence, it is likely to be positive in terms of additional spending for sectors like FMCG, consumer durable goods and for automobiles, said Amarjeet Maurya, AVP- Mid Caps at Angel Broking.
Among individual stocks, Dabur, Hindustan Unilever (HUL), Marico, TVS Motors, Hero Honda, Bajaj Auto, Jubilant FoodWorks are top picks. Two-wheeler segment also stands to get benefit due to middle class tax relief, but not as much as good for four-wheeler segment as there is no change in tax for upper band i.e. above Rs 5 lakh, said Debadrata Bhattacharjee, Head of Research, CapitalAim.
There is a positive takeaway for the real estate sector as well. The abolition of tax on notional rent on second homes will incentivise people to now invest in second homes at a much aggressive rate. This could boost the second home market to some extent, analysts say. This apart electricity for all by 2019 and infra push will also boost housing companies.
However, for the housing sector to regain significant momentum, the real need is to woo back the long-term investors who exited the residential market. One possible way was to re-introduce the home loan benefit on second homes. The government's move on this front is certainly welcome, said Anuj Puri, Chairman – Anaraock Property Consultants.
Credit rating agency Moody's, however, said Interim Budget is credit negative on fiscal deficit, giveaways. The agency said in the Interim Budget there is an absence of new policies to boost revenues but has many measures leading to higher expenditure which though will increase consumption will also increase the fiscal burden.