What are the sectors investors need to track during this upcoming budget?

The growing presence of the private sector in education has increasingly industrialised the sector in recent times. This is also reflected in the growing number of training institutes and bigger corporate groups have entered the fray in the last decade. However, the government is still a large stakeholder in this sphere and any policy announcements relating to the sector would have an impact on the private sector too. So, the sector will have some positive news on the budget day. I think investors should track the education sector.

Investing watching sectors is something small investors can forfeit. Reason, one being this is a strategy followed by MF managers, when they keep switching from one industry to the other based on short term movements, which a small investor cannot track. Two, in India all industries as seen from their financials make around 15% profit margin and 1 time asset turn over giving a ROI of 15%. Where as in US it is the other way round, they make a profit margin of less tha 1% and asset turn over between 8 to 15 times making the ROI around 15%. So when this is symetric for all industries watching industrial divisions and investing is per se not required.

Moreover, now the government of India is coming with a new interest rate policy for lending where by banks will charge interest rates based on profitability. So now hosting and watches has the largest profitability then they will wind up paying more interest rate on borrowing and others lesser, equalising their profitability. So there won't be any longer prime and subprime lending, only floating rates based on profitability. So irrespective of profitability difference in industrial classes there is going to be some sort of equanimity going to be created using this policy.

As rise of terrorist attacks the more emphasis on Internal Security not Defence        I expect higher amount allocated for the same. Education is second but very few companies directly benefited from this as there are very few cos listed No Schools yet listed. Water is going to be priority sector. Agriculture is going to get importance.

With food inflation in the higher range FM doesn't have option but to allocate higher for agriculture Be it for research, incentive to farmers.

Hi,

I would recommend to stay cautious on Banking till budget due to risk of non exit of stimulus which would push up borrowing resulting in high sec yields.

Since export sectors are expected to feel some pain due to flow of funds into india resulting in dollar weakness, we may expect some stimulus extended to this sectors.

Amit

Sectors one can keep a watch during the Budget are :- 1.Fertilizers,PSU,Banking