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India's current world-beating economic growth rate on the back of an investment boom resembles that of 2003-07 when growth averaged more than 8 per cent, according to economists at <keyword id="48670" type="General" weightage="20" keywordseo="Morgan-Stanley" source="Orion">Morgan Stanley</keyword>. In a report '<keyword id="20990538" type="General" weightage="20" keywordseo="The-Viewpoint-India" source="Orion">The Viewpoint: India</keyword> - Why this feels like 2003-07', Morgan Stanley said after a decade of investment to GDP steadily declining, <keyword id="46930" type="General" weightage="20" keywordseo="capex" source="Orion">capex</keyword> has emerged as a key growth driver in India. "We think the capex cycle has more room to run, therefore the current expansion closely resembles that of 2003-07. The current cycle is driven by investment outperforming consumption, <keyword id="3567420" type="General" weightage="20" keywordseo="public-capex" source="Orion">public capex</keyword> leading initially but <keyword id="3896912" type="General" weightage="20" keywordseo="private-capex" source="Orion">private capex</keyword> rapidly catching up, the urban consumer leading consumption followed by catch-up in rural demand, market share in global exports rising and macro stability risks kept in check. "We think the defining characteristic of the current expansion is the rise in the investment-to-GDP ratio. Similarly, in the 2003-07 cycle investment to GDP rose from 27 per cent in F2003 (fiscal year ending March 2003) to 39 per cent in F2008, which was close to the peak. "Investment to GDP then hovered around those levels until it peaked in F2011. 2011 to 2021 then registered a decade of decline - but the ratio has now inflected again to 34 per cent of GDP and we expect it to rise further to 36 per cent of GDP in F2027E," it said. In 2003-07, the capex boom led to an acceleration in productivity, job creation and income growth. As more labour was absorbed into employment by the strengthening economy, savings to GDP also rose from 28 per cent in F2003 to 39 per cent in F2008. During 2003-07, GDP growth averaged 8.6 per cent and headline CPI inflation averaged 4.8 per cent. The current account balance stayed within the central bank's comfort zone, ranging between 2.8 per cent to -1.4 per cent of GDP on a 4Q trailing sum basis. Even when oil prices shot up to USD 145 per barrel in July 2008, the current account deficit only widened to 2.4 per cent of GDP the following quarter, the research report said. Gross fixed capital formation (GFCF) growth in India accelerated sharply from 8.2 per cent in 2002 to 17.5 per cent in 2004, and the pace of growth held firm at 16.2 per cent in 2005-07. In that cycle, the fiscal deficit was already consolidated, the banking system's non-performing loan issues were cleaned up and the economy was poised for a capex upswing. "However, the initial pick-up in private consumption growth was more modest, averaging just 4.8 per cent in 2003-04," it said. In the current cycle, real GFCF growth continued to hold strong at 10.5 per cent in October-December, staying above the pre-Covid 2017-18 average of 9.6 per cent. "This has been mainly driven by public capex so far, as the corporate sector has been working through multiple shocks from previous years that have weighed on its ability to invest," it said adding now that corporate profit (based on bottom-up company data) to GDP has picked up from a trough of 1.1 per cent in F2020 to 5.4 per cent in F2023, early signs of private capex gaining momentum are being seen. On the flip side, private consumption is still relatively weak, tracking at just 3.5 per cent in the December quarter, below the pre-Covid 2017-18 average of 6.5 per cent. Morgan Stanley said policymakers' concerted policy push on supply-side reforms in recent years has meant that real government fixed capex growth inflected higher from F2020. Government fixed capex as a percentage of GDP rose from a trough of 3.6 per cent in F2019 to 4.0 per cent in F2021, again picking up ahead of private capex. "A capex-led growth cycle can extend expansion, as rising investment to GDP ratios drive capital deepening and boost productivity growth. The deployment of surplus labor as capex creates employment opportunities can lead to higher income and savings in an economy and ensure the current account balance remains in a manageable range, even as investment to GDP rises," it said adding the public capex-led nature of the present cycle in India plays an even more important role for the sustainability of the overall capex cycle. Infrastructure projects tend to face long gestation periods but generate large positive externalities. "In that sense, we believe it is important for the public sector to undertake such spending to ensure a clearer runway for private capex to take off by eliminating supply-side bottlenecks ahead of time," it added.

India's economic boom feels like 2003-07: Morgan Stanley

<ul><li>Market watchers have been hoping that India might head to a <keyword id="1067776" type="General" weightage="20" keywordseo="capex-cycle" source="Orion">capex cycle</keyword> as seen in 2003-08.</li><li>While there are similarities, the global demand scenario is different, say economists.</li><li>In terms of announcements, most of them relate to airlines where the benefits flow to the manufacturers outside India. </li></ul>The Indian markets are hitting new highs every day and the government is hopeful that this will translate to a higher capital expenditure (capex) cycle starting soon. However, even as hopes build for a repeat of 2003-08, the early indicators are mixed, as per economists. “There have been affirmative statements made by several companies on investment in FY24 which is positive as it is premised on a recovery in consumption demand. The picture for the first quarter of the year is, however, quite expectedly mixed. Therefore the announcements are definitely not broad-based and are restricted to a handful of sectors,” say economists at Bank of Baroda. What’s common with 2003-08? Most experts say that levers are in place for a repeat for the 2003-2208 high capex phase, which was led by private investment. Tailwinds for a capex recovery are similar — like higher utilisation levels which are also expected to pick up in demand. Strong bank and corporate balance sheets, an infrastructure push by the Indian government in the form of highways, railways, rural infra, Jal Jeevan Mission and defence spending should augur well for this. Moreover, the Production Linked Incentive (PLI) is also another added positive for domestic manufacturing, in addition to the push for energy transition. The amplified need for data centres and China+1 strategy are providing a fertile ground for revival of the capex cycle, says India Strategy report by Prabhudas Liladher. “This is likely to be the first industrial led capex cycle after the 2003-08 cycle was led by power and infra,” says the Prabhudas Lilladher report. A Kotak Institutional Equities report agrees that the levers are in place but remains cautious, it believes that the space for a sustained pace of <keyword id="4875151" type="General" weightage="20" keywordseo="government-capex" source="Orion">government capex</keyword> is limited. “Private capex cycle would require visibility of long-term high demand growth (including global growth), which is still missing. For now, even as the long-term growth fundamentals remain strong, we remain cautious in calling out for a broad-based sustained capex cycle,” Kotak says. Without a global impetus and visibility of medium to long-term demand, the capex cycle over the next 5-7 years may be much narrower and slower than 2003-08, the report adds. Airlines invest, but where? As much as ₹5.96 lakh crore worth of investments have been announced for Q1FY24 – of which 74% share comes from the airlines sector. “Investments in this industry are unique in so far as it involves purchase of aeroplanes which are imported. Hence while it does add to the capital stock of the country it would not be generating backward linkages with other sectors and hence other related industries may not benefit much from such purchases. The boost is more for the global manufacturers of these aircrafts,” says Bank of Baroda. The share of power sector is 10%, and is from the conventional space. The chemicals sector has a share of 8% followed by machinery with 3% and the auto sector with 2%. ‘Optimism in the long-term’ Data from the funds raised in the corporate bond market also provides a clue into the mood of private investments. As per BoB data, the total amount of funds raised was impressive at ₹2.33 lakh crore as against ₹0.97 lakh crore in the last year. Here too, 89% of the funds mobilised was from the financial sector of which asset financing companies accounted for 72% – indicating limited fund raising by non-finance companies. “Therefore, the investment story looks blurred when looked at from the point of view of the debt market. There could be reasons to be optimistic of the future. However, in the short to medium term the heavy lifting has to be done by the government on investment,” say BoB economists.

India on the brink of witnessing a 2003-08 kind of capex push but challenges remain

In response to higher-than-expected tax revenue and a record surplus transfer from the Reserve Bank of India (RBI), the Indian government is considering an 8-10% increase in <keyword id="20018917" type="General" weightage="20" keywordseo="capital-expenditure" source="keywords">capital expenditure</keyword> (capex) for the fiscal year 2025, according to Pantomath Group's quarterly report, "Market Kaleidoscope: Quarterly Market Insights." This adjustment could raise the capex from the previously allocated Rs 11.11 lakh crore, aiming to bolster infrastructure and economic growth. This fiscal boost comes as India reaches a historic financial milestone. The total market capitalization of all stocks listed on the Bombay Stock Exchange (<keyword id="19895774" type="General" weightage="20" keywordseo="BSE" source="keywords">BSE</keyword>) briefly surpassed $5 trillion for the first time, placing India among global giants such as the US, China, Japan, and Hong Kong. India's primary market is set for a dynamic period, with 55 companies planning to raise over Rs 68,000 crore through Initial Public Offerings (IPOs). The first half of FY2025 has already seen 35 mainboard IPOs, collectively raising around Rs 32,000 crore with an average subscription rate of 61 times. The Indian market maintained a positive outlook in the first quarter of FY2025, driven by strong Q4FY24 earnings, favorable economic data, and positive global cues. Despite early June volatility following the 2024 <keyword id="19895394" type="General" weightage="20" keywordseo="lok-sabha" source="keywords">Lok Sabha</keyword> election results, market sentiment improved with the BJP securing 272 seats and a total of 292 seats for the NDA with allied support. This political stability under Prime Minister Narendra Modi's leadership is expected to promote long-term economic growth, with a focus on infrastructure, electric mobility, startup support, power distribution, digital privacy, and healthcare initiatives. Corporate India's performance in the March quarter of FY2024 met expectations, showing double-digit growth in net profit and single-digit revenue increases. Non-lending companies experienced moderate operating margin expansion due to favorable commodity prices and cost controls. The peaking interest rates and continuity of <keyword id="19978691" type="General" weightage="20" keywordseo="government-policies" source="keywords">government policies</keyword> are anticipated to support healthy corporate growth in FY2025. <h2>Growth to continue</h2>The government's push for increased <keyword id="20068449" type="General" weightage="20" keywordseo="ethanol-production" source="keywords">ethanol production</keyword> targets a 20% blending by 2026, benefiting ethanol-heavy sugar companies and promoting biofuel goals. The real estate market is projected to grow significantly, requiring Rs 14 lakh crore in debt financing from 2024 to 2026. This growth will positively impact the banking and financial sectors. Major telecom operators have raised tariffs post-election, potentially improving sector financials and paving the way for sector re-rating. Major cement players are expanding through acquisitions, with an expected 6-7% compounded growth and market dominance by the top five players by March 2025. FMCG Companies expect recovery in rural business due to factors like a normal monsoon, robust crop yields, and government measures, maintaining robust rural demand. The potential roll-out of the FAME 3 Scheme to support <keyword id="19963112" type="General" weightage="20" keywordseo="electric-vehicle-sales" source="keywords">electric vehicle sales</keyword> is anticipated, with a budgetary allocation of around Rs 10,000 crore. Sectors such as auto, cement, defence, railways, consumer durables, energy, and banking are expected to outperform. Lagging sectors like IT and specialty chemicals offer value-buying opportunities at lower levels. The structural bull market for Indian equity is supported by strong domestic fundamentals and government reforms, with a positive medium- to long-term market outlook. Globally, the US market showed resilience, except for the Dow Jones. The Federal Reserve maintained interest rates at 5.25-5.50%, awaiting inflation to move towards the 2% target before considering rate cuts. The US GDP grew at 1.4% annually in Q1 2024, with mixed economic indicators highlighting both strengths and challenges. The Indian <keyword id="19926041" type="General" weightage="20" keywordseo="IPO-market" source="keywords">IPO market</keyword> has seen significant growth, with a surge in companies seeking to list shares and a rise in capital raised. The first half of 2025 saw strong retail investor participation, reflecting confidence in India's growth prospects. Mahavir Lunawat, Managing Director, Pantomath Capital Advisors Private Limited, said, "Favourable market conditions, high liquidity, a conducive growth environment with stable interest rates, and benign inflation have facilitated a boom in the IPO market. The IPO market will experience a stronger pull post-budget. India is set to become the new equity funding frontier for global corporations." He further added. "We are on the brink of sustained, long-term momentum in the IPO market, with this year potentially becoming the best for IPOs. India's solid macroeconomic environment and promising growth prospects create an ideal backdrop for this vibrant IPO market. Additionally, there is robust participation from both domestic institutional investors and retail investors." With the Indian government's potential capex increase and the robust primary market activity, the <keyword id="19948184" type="General" weightage="100" keywordseo="Indian-economy" source="keywords">Indian economy</keyword> is poised for sustained growth. The upcoming period is expected to see heightened market activity, further IPOs, and economic stability, creating a conducive environment for investment and development.

India may boost FY25 capex by 8-10% amid surging revenues and record RBI surplus, says Market Kaleidoscope report

<ul><li><keyword id="2887509" type="General" weightage="80" keywordseo="polycab" source="Orion">Polycab</keyword> has given multibagger returns in 2023, as it zoomed by 117%.</li><li>It’s a leader in the wire &amp; cables market with 22-24% organized market share.</li><li>Jefferies says that the stock is a good play on India capex. </li></ul>Mumbai-based wire and cable company has been amongst the top gainers in the last few sessions, as the benchmark indices went on a bull run? What’s making people rush in to buy midcap stock, while the economy presents a robust picture. Polycab was added to MSCI’s domestic index in late November. This move will trigger fund buying in the stock, which will support its stock price at its heights. In spite of giving multibagger returns of 117% this year, it’s one of those few midcap stocks that’s not run up ahead of its target price set by analysts (see table). There is more juice left in the stock as the wire and cable maker set a target to achieve ₹20,000 crore annual revenues by FY26. Its revenues for FY23 were at ₹14,107 crore. “The company is on track to achieving this milestone well before time but indicated that revisions to the target, if any, will be made only at the end of FY24. Polycab is also nearing its goal of 10% exports in the topline, reaching 9.3% in Q2FY24,” said a report by BobCaps. Target price of Polycab <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Brokerage </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> Target Price </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Jefferies </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹6,220 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">BobCaps </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹6,100 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Centrum </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹5,675 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Axis Securities </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹5,509 </td></tr></tbody></table> Demand’s on the move The company’s revenues rose by 33% in the first half of the financial year, the company expects to maintain the momentum in the second half too. All thanks to favourable demand conditions for its core wires and cables business due government’s infrastructure push as well as construction activity in the real estate sector. “We expect Polycab to register 19% revenue compounded annual growth rate (CAGR) over FY23-26. Volume growth prospects and margin profile for cables &amp; wires remains strong led by rising industrial and infra capex,” said a report by Centrum. Its high-margin B2C business of fans and lighting, however, has been growing slower, at around 8% in Q4FY24 as compared to its core business. “Management believes the brand repositioning will bolster sales traction, deepen the company’s pan-India presence and particularly help the fast-moving electrical goods (FMEG) business. A proxy play on India capex Jefferies also believes that Polycab is a good play on India capex. As India’s capex increases, its business will grow. That’s because the leader in the Indian C&amp;W industry, with a 22-24% share in the organized market. “On the private side, average industry capacity utilization stands at 70-75%, which could entail fresh capacity adds across many sectors. On the public side, 2023 budgetary allocation has been directionally positive for capex and infra,” says Jefferies. More data like heightened industrial activity, and India’s GDP projected to grow at 7% in FY24, will all add to its appeal.

This multibagger midcap stock is a proxy play on India capex

Bankers welcomed Finance Minister <keyword id="129243" type="General" weightage="80" keywordseo="nirmala-sitharaman" source="Orion">Nirmala Sitharaman</keyword>'s budget proposals as being growth accretive, and hailed the focus on capital expenditure while continuing with fiscal consolidation. On the critical question of revival in private capital expenditure, which has been lagging for several years now, private sector lender <keyword id="13918428" type="DOMAIN" weightage="20" keywordseo="kotak-mahindra-bank" botkeyword="" source="ET" sourcekeytype="COMPANY" meta.keywordsubtype="EQ" meta.aliasname="kotak mahindra bank" meta.entityname="Kotak Mahindra Bank Ltd." meta.entityid="12161" meta.seoname="kotak-mahindra-bank-ltd">Kotak Mahindra Bank</keyword>'s whole time director <keyword id="818755" type="General" weightage="80" keywordseo="kvs-manian" source="Orion">KVS Manian</keyword> opined that it will take another 12 months to revive even though corporates have been investing off and on lately. “No bad news is good news. It is a fairly decent budget. The FM has maintained a fair balance on fiscal prudence, sustainability and ease of doing business,” Manian told PTI after the presentation of the budget. <keyword id="13222" type="DOMAIN" weightage="20" keywordseo="sbi" botkeyword="" source="ET" sourcekeytype="COMPANY" meta.keywordsubtype="EQ" meta.aliasname="sbi" meta.entityname="State Bank of India" meta.entityid="11984" meta.seoname="state-bank-of-india">SBI</keyword> chairman <keyword id="2003868" type="General" weightage="80" keywordseo="dinesh-khara" source="Orion">Dinesh Khara</keyword> said the budget is growth accretive, fiscally prudent and consumption supportive. “The huge emphasis on capital expenditure could be the perfect recipe for a private investment cycle that is already visible. Support for MSME and Agriculture will broad base credit growth,” Khara added. He also said that the “reasonable Government borrowing numbers” will support lower interest rates and the move towards a clutter free new tax regime will significantly spur consumption. Banking industry's lobby grouping Indian Banks Association's chairman A K Goel said the increased capital expenditure could help in further increasing the demand for bank funds and the Agriculture Accelerator Fund woill also be helpful. <keyword id="686923" type="General" weightage="80" keywordseo="umesh-revankar" source="Orion">Umesh Revankar</keyword>, the executive vice chairman of <keyword id="12730794" type="DOMAIN" weightage="20" keywordseo="shriram-finance" botkeyword="" source="ET" sourcekeytype="COMPANY" meta.keywordsubtype="EQ" meta.aliasname="shriram finance" meta.entityname="Shriram Finance Ltd." meta.entityid="13106" meta.seoname="shriram-finance-ltd">Shriram Finance</keyword> said the income tax benefits announced will boost purchasing power for middle-class consumers. "I believe the announcements made will trigger a pick-up in credit off take for small enterprises, the consumption-driven two-wheeler business and lending to transportation," he added. Non-bank lender Tata Capital's managing director and chief executive <keyword id="128186" type="General" weightage="80" keywordseo="rajiv-sabharwal" source="Orion">Rajiv Sabharwal</keyword> said the strong agricultural credit outlay, support measures, ease of doing business, and digitization drive across various sectors will improve multiple clusters within the economy. American lender Bank of America's country head Kaku Nakhate said allowing foreign banks to conduct acquisition financing from GIFT City is a welcome step and also hailed the dual budget proposal for a single window clearance for IFSCA, SEZ, <keyword id="30067" type="General" weightage="80" keywordseo="rbi" source="Orion">RBI</keyword>, SEBI and GSTN at GIFT City. KPMG's national head of tax, <keyword id="309284" type="General" weightage="80" keywordseo="rajeev-dimri" source="Orion">Rajeev Dimri</keyword>, also welcomed Finance Minister Nirmala Sitharaman's measures for ensuring that the relaxations given to common taxpayers have not derailed fiscal math, and the government has stayed on the path of fiscal consolidation. Pointing out to the Goods and Services Tax revenue accretion over the last few months, he said the taxpayers should be credited for the performance. The budget rightly “rewards” the taxpayers for their commitment, Dimri said. LuLu Financial Holdings Managing Director Adeeb Ahamed said the budget is focussed with equal focus on traditional and emerging sectors. Adeeb, who has significant investments in India's financial services sector through LuLu Forex and LuLu Finserv, said the move to ramp up the credit guarantee scheme for MSMEs will give a fillip to enabling faster access to financial services. SEE ALSO: <a href="https://www.businessinsider.in/tech/news/first-impressions-samsung-galaxy-s23-s23-plus-and-s23-ultra-go-heavy-on-photography-and-gaming/articleshow/97532856.cms?utm_source=social_sticky_amp&amp;utm_medium=social_sharing&amp;utm_campaign=Click_through_social_share">First Impressions: Samsung Galaxy S23, S23 Plus, and S23 Ultra bet big on photography and gaming</a> <a href="https://www.businessinsider.in/tech/mobile/news/new-patent-suggests-that-apple-could-bring-a-foldable-iphone-with-a-self-healing-display-in-the-future/articleshow/97302738.cms">New patent suggests that Apple could bring a foldable iPhone with a self-healing display in the future</a>

Bankers say private capex will take one more year to revive

<ul><li>The <keyword id="16206547" type="General" weightage="20" keywordseo="Economic-Survey-2023" source="Orion">Economic Survey 2023</keyword> also projected Indian GDP to grow at 7% in FY23, down from 8.7% in FY22. </li><li>Finance minister <keyword id="129243" type="General" weightage="80" keywordseo="nirmala-sitharaman" source="Orion">Nirmala Sitharaman</keyword> credited the revival in capital expenditure spendings by the central government and the private sector as one of the drivers of economic growth in FY23. </li><li>The survey also underlined that capital expenditure investments from the private sector are now essential in creating jobs, as exports and pent up demand are now plateauing. </li></ul>The pre-budget <keyword id="6354872" type="General" weightage="20" keywordseo="Economic-Survey" source="Orion">Economic Survey</keyword> 2023 released on Tuesday projects India’s gross domestic product (GDP) will grow 6-6.8% in the financial year 2023-24, the slowest since 2021-2022. In its first advance estimate, the Survey has projected a GDP growth of 7% for FY23, ahead of the Reserve Bank of India’s <a href="https://www.businessinsider.in/finance/news/rbi-downgrades-fy23-gdp-growth-projections-to-6-8-percent/articleshow/96047963.cms">projection</a> of 6.8%. “The optimistic growth forecasts stem from a number of positives like the rebound of private consumption giving a boost to production activity, higher capital expenditure (capex), near universal vaccination coverage enabling people to spend on contact-based services,” said the Economic Survey 2023. The return of migrant workers to cities to work at construction sites also led to a “significant decline” in housing market inventory, the Survey added. “As expected of a nation of this size, the Indian economy in FY23 has nearly recouped what was lost, renewed what had paused, and re-energised what had slowed during the pandemic and since the conflict in Europe,” the Survey said. <cmsannotation type="cmsannotation" annotationid="Government &amp; private capex revival key growth driver in FY23, says FM" comment="subhead" text="Government &amp; private capex revival key growth driver in FY23, says FM">Government &amp; private capex revival key growth driver in FY23, says FM</cmsannotation> The Survey credited the revival in capital expenditure spendings by the central government and the private sector as one of the drivers of economic growth in FY23, while tabling the Economic Survey 2023 in the Parliament on Tuesday. “The capital expenditure of the Central Government and crowding in the private capex led by strengthening of the balance sheets of the corporates is one of the growth drivers of the Indian economy in the current year,” the Survey said. Larsen &amp; Toubro, which is often seen as a proxy for India’s infrastructure development, also sees positive trends in capex spending in the private sector. “We are possibly amidst a synchronous capex recovery in India and the GCC (Gulf Cooperation Council). With the revival of private capex investments, India should witness a multi-year capex cycle in the current decade, which augurs well for us,” <a href="https://www.businessinsider.in/business/corporates/news/lt-reports-2553-crore-q3-net-profit-sees-boost-from-major-private-capex-investments/articleshow/97448298.cms">said</a> SN Subrahmanyan, chief executive officer and managing director, L&amp;T, on Monday. The government is also bullish on credit offtake, and said it will usher in a virtuous investment cycle going forward, in combination with an increase in capex by the private sector. The micro, small and medium enterprises (MSME) sector also witnessed healthy growth in credit uptake at 30.6% between April and November 2022, thanks to “well-capitalised public sector banks ready to increase the credit supply and the credit growth to the MSME sector,” the Survey said. <cmsannotation type="cmsannotation" annotationid="Unemployment rate falls to 9.8% in July-Sept 2022, but private capex needed for job creation going forward" comment="subhead" text="Unemployment rate falls to 9.8% in July-Sept 2022, but private capex needed for job creation going forward">Unemployment rate falls to 9.8% in July-Sept 2022, but private capex needed for job creation going forward</cmsannotation> On the jobs front, the Survey pointed out that the unemployment rate for people aged 15 years and above has fallen from 9.8% in the quarter ended September 2021 to 7.2% in June-September 2022. However, the Survey said that with exports and the release of pent-up demand plateauing, the onus is now on the private sector to step up with capex investments to create jobs going forward. “Since export growth is plateauing and the ‘pent-up’ release of demand will have a finite life, it is essential that capex continues to grow to facilitate employment in the economy,” the Survey said. However, Rumki Majumdar, economist, Deloitte India, said that India needs to move up the global value chain if it wants to put the emphasis on creating jobs. “This would require manufacturers to leapfrog to newer technologies and transition to a new and exacting definition of competition, both of which will have implications on job creation, especially for the unskilled,” Majumdar said. <cmsannotation type="cmsannotation" annotationid="‘Financial contagion emanating from advanced economies’" comment="subhead" text="‘Financial contagion emanating from advanced economies’">‘Financial contagion emanating from advanced economies’</cmsannotation> Earlier today, the International Monetary Fund <a href="https://www.businessinsider.in/india/news/indian-economy-retains-its-crown-as-a-bright-spot-imf-report/articleshow/97472027.cms">said</a> it expected the Indian economy to grow at 6.1% in 2023, as against 6.8% in 2022. It’s not just India which has seen a downward revision in its growth outlook – according to the IMF’s latest <a href="https://www.imf.org/en/Publications/WEO">World Economic Outlook</a>, the global economy is projected to grow at 2.9% in 2023, significantly lower than the historical average of 3.8%. “Slowing global growth apart from monetary tightening may also lead to a financial contagion emanating from the advanced economies,” the Survey said. RBI projects inflation at 6.8% in FY23, which is still above its upper tolerance limit of 6%. However, the Survey remained optimistic about the inflation scenario in the country, saying, “India’s inflation rate did not creep too far above its tolerance range compared to several advanced nations and regions.” The Survey added that the inflation expectations of both businesses and households have moderated now. <cmsannotation type="cmsannotation" annotationid="Services sector to lead growth in FY23" comment="subhead" text="Services sector to lead growth in FY23">Services sector to lead growth in FY23</cmsannotation> The Economic Survey underlined that the services sector is expected to far outpace the agriculture and industrial sectors in terms of growth. In its first advance estimate for FY23, the Survey projects the services sector to report a growth rate of 9.1% in its gross value add, up from 8.4% in FY22. In contrast, the industrial sector is projected to grow at 4.1% in FY23, significantly lower than 10.3% in FY22. The agriculture and allied activities sector is expected to grow slightly faster at 3.5% in FY23, up from 3% in FY22. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/adani-enterprises-fpo-subscription-details-stock-price/articleshow/97476824.cms">Adani Enterprises FPO subscribed 80% so far on the last day</a> <a href="https://www.businessinsider.in/finance/news/rupee-may-remain-under-depreciation-pressure-says-economic-survey/articleshow/97484894.cms">Rupee may remain under depreciation pressure, says Economic Survey</a> <a href="https://www.businessinsider.in/india/news/gautam-adani-drops-out-of-top-10-richest-people-list-just-2-2-bn-ahead-of-mukesh-ambani/articleshow/97482642.cms">Gautam Adani drops out of top 10 richest people list: Just $2.2 bn ahead of Mukesh Ambani</a>

Indian economy projected to grow between 6-6.8% in FY24; private capex necessary for job creation: Economic Survey 2023

<ul><li>Aggregate private sector’s <keyword id="437943" type="General" weightage="60" keywordseo="wage-bill" source="Orion">wage bill</keyword> at Rs 30 trillion surpasses government’s wage bill for the first time in FY23.</li><li>Wage bill of India’s listed companies expanded by 17% to Rs 11.5 trillion in FY23. </li><li>Growth in wages was largely driven by NBFCs, IT, private banks, consumer discretionary and auto sectors.</li><li>Recovery in wages in the informal sector is key, as rural wages have continued to languish till early FY23. </li></ul> The private sector has been the engine of job creation over the past few decades, but the wage bill of the government has been bigger so far. This has changed in FY23, as the wage bill of the private sector at Rs 30 trillion has for the first time surpassed the government’s Rs 28 trillion wage bill. What this suggests is that the private sector is adding new jobs thanks to the robust economic growth print over the last decade. A study done by ICICI Securities also shows that the rising trajectory of private corporate wage bills appears to be structural “having grown from 9% of GDP in FY12 to 13% in FY22 as the formalisation effect takes effect.” This is not the only good news. The ratio of the private sector’s wage bill to GDP for developed economies is as high as 45% but this is only in the mid teens in India. What this suggests is that there is significant room for India to create more jobs in the private sector as the economy continues to formalise. So far the job creation in the formal sector has been led by IT services. The IT sector accounts for 42% of the wage bill of listed companies. Any slowdown in the hiring or wages of this sector will be a drag on overall compensation by the private sector. Sectoral breakdown An analysis done by ICICI Securities suggests that In FY23, the aggregate wage bill of the listed private corporate space expanded by a robust 17% to reach Rs11.5 trillion, which was driven by NBFC, private bank, IT, consumer discretionary, industrial and auto sectors. While the IT sector accounts for 42% of the wage cost of listed companies, employees of BPO and IT services only account for 12% of the organised sector’s workforce. In FY23, the wage bill of listed companies rose by a robust 17% to Rs 11.5 trillion. Once again this wage growth was driven by NBFCs, private banks, IT services, consumer discretionary, industrial and auto sectors. In FY23, 14 million new employee provident fund accounts were added. While the private sector’s job creation is good news for the government’s coffers, it is the informal sector that creates jobs for the economy at large. The non-agri informal workforce accounts for 72% of jobs. If one includes agricultural jobs in this bucket, then the informal sector accounts for 85% of the workforce. According to the Economic Survey of FY22, the informal sector accounted for 89% of the workforce. Since the effects of the pandemic started easing, wages in the informal sector too have been on the rise. According to the periodic labour force survey (PLFS), the daily wages of an urban daily wage worker was at Rs 385/day in Q2FY21, which increased to Rs 464/day in Q1FY23. The wage growth was healthy also for the formal sector, where salary rose from Rs 20,030 per month in Q2FY21 to Rs 21,647 in Q1FY23. Blue collar job vacancies have been steadily rising since 2022 as the economy has opened up completely after the pandemic lockdowns. Also the demand for gig workers is on the rise too. This is the story of urban India, but monthly wages in rural India have continued to stagnate at Rs 14,700 for the 18-month period ending Q1FY23 as per the annual PLFS survey. The biggest job creators in the listed space will be companies operating in sectors such as real estate, services, discretionary consumption, auto and those that stand to benefit from an uptick in the capex cycle. In contrast, rural India continues to give mixed signals as economists are not yet clear on the impact that erratic rains may have on wages and agri output in the ongoing kharif season.

Indian private sector's wage bill surpasses government's for the first time in FY23

<ul><li>Finance minister Nirmala Sitharaman’s <keyword id="12743893" type="General" weightage="20" keywordseo="Budget-2023" source="Orion">Budget 2023</keyword> has set the tone for the Indian economy’s longer-term future, or the <keyword id="13005152" type="General" weightage="20" keywordseo="Amrit-Kaal" source="Orion">Amrit Kaal</keyword>, as the government put it. </li><li>The broad consensus amongst analysts is that the government’s focus on capital expenditure and conservatism on welfare schemes has improved the quality of spending. </li><li>Going forward, analysts expect cyclical and capital-intensive sectors like infrastructure to benefit from the government’s economic direction. </li></ul>Finance minister Nirmala Sitharaman’s<a href="https://www.businessinsider.in/budget/news/income-tax-bonanza-capex-push-emerge-as-the-stars-of-budget-2023-24/articleshow/97521646.cms"> Budget 2023</a> has set the tone for the Indian economy’s longer-term future by making room for fiscal consolidation while still boosting the government’s capital expenditure investments, made possible by cutting down on populism, say analysts. This is crucial especially at a time when the global economy is expected to slow down – according to the International Monetary Fund’s latest<a href="https://www.imf.org/en/Publications/WEO/Issues/2023/01/31/world-economic-outlook-update-january-2023"> World Economic Outlook</a>, the global economy is projected to grow at 2.9% in 2023, significantly lower than the historical average of 3.8%. “The <keyword id="6358021" type="General" weightage="100" keywordseo="budget" source="Orion">Budget</keyword> has tried to strike some balance between fiscal consolidation and growth, by continuing its focus on capital expenditure and creating fiscal space for that by cutting revenue expenditure,” said a report by CRISIL. Fiscal discipline is an easy casualty in pre-election budgets, since public interest and desire to engage in populism to curry favour with the electorate is at its highest during these times, as far as budgets are concerned. However, analysts expected the government to keep its fiscal consolidation policy on track, and as such, the announcements to cut revenue expenditure did not come as a surprise. “The government continued with its thrust on <keyword id="46930" type="General" weightage="20" keywordseo="capex" source="Orion">capex</keyword>, in-line with our expectation, and did not increase welfare spending,” said a report by Goldman Sachs. <cmsannotation type="cmsannotation" annotationid="Populism out, fiscal prudence in: On expected lines, say analysts" comment="subhead" text="Populism out, fiscal prudence in: On expected lines, say analysts">Populism out, fiscal prudence in: On expected lines, say analysts</cmsannotation> Amongst the populist measures which have seen a cutdown in Budget 2023 are food and fertilizer subsidies, which have been reduced by 31% and 22% year-on-year to ₹1.97 lakh crore and ₹1.75 lakh crore in FY24 respectively. In sharp contrast, capital expenditure outlay has been increased by 33% to ₹10 lakh crore for FY24. When compared to FY19, this is a three-fold increase. Sitharaman said that the government will meet the fiscal deficit target of 6.4% of the gross domestic product (GDP) in FY23, while the FY24 target has been set at 5.9%. Subsequentially, its target for FY25-26 is more ambitious, with the fiscal deficit projected to be less than 4.5%. The claw down on populism has been received well by economists and experts, who have called this year’s budget a “force multiplier”. “In keeping with its focus on inclusive growth, the Union Budget has hiked outlays on infrastructure and agriculture which in our view would have a force multiplier impact on the economy,” said S Ranganathan, head of research at LKP Securities. Sitharaman also announced that the gross borrowings are estimated at ₹15.43 lakh crore in FY24, lower than the Economic Survey 2023 estimate of ₹15.77 lakh crore. This should also lead to a moderation in the 10-year bond yields to 7-7.1% in FY24, according to Abheek Barua, chief economist, HDFC Bank. <cmsannotation type="cmsannotation" annotationid="Preparing for a world with slower economic growth" comment="subhead" text="Preparing for a world with slower economic growth">Preparing for a world with slower economic growth</cmsannotation> With analysts expecting a slowdown in the world economy, analysts say the Budget has been set with this in mind – this is evident from the government’s smarter allocation of funds to capex while trimming down welfare schemes. The government also expects a moderation in the GDP growth going forward – the Indian economy is projected to grow 7% in FY23, further moderating to 6-6.8% in FY24. However, brokerages are relatively conservative in their estimates, pegging GDP to grow between 6% to 6.5% in FY24. “Slower global growth will hit India’s exports, while tight financial conditions in the country could weaken domestic demand, cumulatively leading to lower revenue growth compared with this fiscal,” said the CRISIL report. On the flip side, moderating inflation will help the government in reducing its food and fertilizer subsidy bills, the report added. The slowdown in exports, combined with the thrust on capex mean that the Indian economy’s growth will be aided by domestic demand instead, according to the analysts at KPMG. “The lending capacity of banks having cleaner balance sheets, the ability of companies with lower debt to borrow, and the government’s digital investments are three key growth magnets for the coming years,” the financial advisory firm said in its report. <cmsannotation type="cmsannotation" annotationid="Fiscal deficit targets ‘ambitious’, but ‘quality’ of spending better" comment="subhead" text="Fiscal deficit targets ‘ambitious’, but ‘quality’ of spending better">Fiscal deficit targets ‘ambitious’, but ‘quality’ of spending better</cmsannotation> However, analysts at Motilal Oswal noted that the government’s fiscal deficit target of 4.5% in FY25-26 could prove to be a challenge. “It is possible only and only if the government keeps its spending growth extremely muted for the subsequent two years, thus restricting its ability to support economic growth,” the brokerage said. It added that the ambitious spending cuts could result in the government falling short of its target in FY24 – either in terms of fiscal deficit, or the market borrowing target it has set for itself. “Government continues to focus on better spending quality,” the brokerage said, given that the focus was on capex over welfare measures. <cmsannotation type="cmsannotation" annotationid="‘Positive for infrastructure and capex-sensitive sectors’" comment="subhead" text="‘Positive for infrastructure and capex-sensitive sectors’">‘Positive for infrastructure and capex-sensitive sectors’</cmsannotation> The broader consensus amongst analysts is that the spending allocations have been done in a smart manner. A moderation in subsidies and allocation of more funds for capex are expected to hit two targets with a single stone, being lower fiscal deficit, and keeping the economy chugging along. “Our equity strategists view the budget as positive for infrastructure and capex-sensitive sectors, given the large capex outlays in the budgets. Our sector analysts also think that the budget is positive for industrials and infrastructure,” said a Goldman Sachs report. The government’s capex push will benefit infrastructure and capex-sensitive sectors. As far as the markets are concerned, analysts believe<a href="https://www.businessinsider.in/stock-market/news/capital-intensive-cyclical-and-value-stocks-to-continue-their-outperformance/articleshow/95659482.cms"> cyclical and capital-intensive stocks will benefit the most</a>. “We prefer BFSI, IT, Industrials, Auto and Cement while we are underweight on Energy in our model portfolio,” said Motilal Oswal, adding that going forward, factors like the upcoming policy meet of the Reserve Bank of India will be important to understand the monetary direction in the near-term. Earlier, a report by ICICI Securities had outlined how cyclical and capital-intensive stocks have outperformed since FY21. The central bank’s expectation of a revival of India Inc’s capital expenditure cycle, and now the government’s capex push has aligned the stars for cyclical and capital-intensive stocks to continue performing well. SEE ALSO: <a href="https://www.businessinsider.in/business/corporates/news/gautam-adani-says-it-would-not-have-been-morally-correct-to-continue-with-adani-enterprises-fpo/articleshow/97542675.cms">Gautam Adani says it would not have been ‘morally correct’ to continue with Adani Enterprises FPO</a> <a href="https://www.businessinsider.in/budget/news/income-tax-bonanza-capex-push-emerge-as-the-stars-of-budget-2023-24/articleshow/97521646.cms">Income tax bonanza, capex push emerge as the stars of Budget 2023-24</a> <a href="https://www.businessinsider.in/budget/news/indian-economy-projected-to-grow-between-6-6-8-in-fy24-says-economic-survey-2023/articleshow/97489284.cms">Indian economy projected to grow between 6-6.8% in FY24; private capex necessary for job creation: Economic Survey 2023</a>

Budget for the Amrit Kaal: Powered by capex, rooted in fiscal consolidation

<ul><li>The Budget’s tax breaks, especially to the salaried class, are expected to lift consumer spending and benefit sectors like retail, FMCG and autos.</li><li>A capital outlay of ₹2.4 lakh crore proposed for the railways sector in the budget will also aid metal companies.</li><li>The proposal to set up 100 labs for development of applications using 5G services are positive for Reliance Jio and Bharti Airtel.</li></ul>The rally in the markets post <keyword id="7706673" type="General" weightage="20" keywordseo="finance-minister-nirmala-sitharaman" source="Orion">Finance Minister Nirmala Sitharaman</keyword>’s speech says a lot about the budget that surprised investors positively. After the bloodbath witnessed by the markets last week, the Union Budget brought a much-needed relief by giving the middle class a vital stimulus in the form of tax breaks. The tax bonanza will increase the disposable income in the hands of the common taxpayer, boosting consumer spending and benefitting sectors like retail, FMCG and autos, analysts say. Apart from a tax bonanza, the FM also proposed a capital expenditure outlay of ₹10 lakh crore for FY2024, up from ₹7.5 lakh crore last year. These and other announcements have given positive cues to metals, hotels, railway and top telecom companies. Here are analysts’ top stocks that are expected to benefit from the budget announcements. <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Top stocks to benefit from budget </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">% change in stock price </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Tata Motors </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-1.27% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Ashok Leyland </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-1.14% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">M&amp;M </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-2.08% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Reliance Industries </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-0.59% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Bharti Airtel </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-0.28% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Mahindra Holidays and Resorts India </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">3.56% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">ITC </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2.06% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Tata Steel </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">1.96% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">JSW Steel </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2.09% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Jindal Steel &amp; Power </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">4.32% </td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table>Source: NSE as on February 1 The proposal to set up 100 labs for development of applications using 5G services in areas including smart classrooms, healthcare and smart cities are positive for top two telecom companies like Reliance Jio and Bharti Airtel, says ICICI Securities. A capital outlay of ₹2.4 lakh crore proposed for the railways sector in the budget will also aid metal companies, say analysts. Positive on ITC despite surge in NCCD Despite a 16% increase in national calamity contingent duty (NCCD) for certain cigarettes, analysts are positive the higher duty will not impact volumes much. “We believe the surge in NCCD will not have a material impact on overall cigarette volume growth for the industry as it implies only a 1-2% price rise. We are positive on ITC and expect the volume growth for the company to remain stable, going ahead, “ said Preeyam Tolia, senior research analyst, FMCG &amp; retail at Axis Securities. Auto sector has lots to celebrate Further, the auto industry also has a reason to celebrate since the budget has removed custom duty on capital goods imported for the manufacturing of lithium-ion batteries used in electric vehicles (EVs). The move is to reduce the cost of EVs in the country. A proposed reduction of basic customs duty rates on goods other than agriculture and textiles from 21% to 13% is seen as another positive, while the relief in taxes is also expected to boost consumer spending by salaried consumers. Also, the finance minister said that more funds would be allocated towards scrapping old vehicles by the central government. "In addition to the vehicle scrappage policy announced in Budget 2021-22, more funds have been allocated now to support efforts to scrap old vehicles under the central government. States will also be supported to help them scrap old vehicles and old ambulances," said Sitharaman in her budget speech. This is seen boosting the commercial vehicles industry. The significantly higher capex allocation will support the commercial vehicles industry and will be positive for multi-axle vehicles and tippers, said Crisil. “Increase in spending on infrastructure, setting up of 50 new airports and heliports, creation of 100 transport infrastructure projects are welcome moves, in addition to the central support for replacing old vehicles. All of these should drive consumption and overall demand of vehicles," said Banwari Lal Sharma, CEO, consumer business at CarTrade Tech. Hotel stocks are among favourites Shares of hotel companies rose on Wednesday after the finance minister announced that the government will promote tourism in the country. "Promotion of tourism will be taken up on mission mode with the active participation of states, the convergence of government programs &amp; public-private partnerships," said Sitharaman in her budget speech. There is a large potential to be tapped in tourism. The sector holds huge opportunities for jobs and entrepreneurship for youths, she added. “There is a huge thrust on the tourism sector in the budget. 50 domestic destinations will be selected and uplifted. Domestic tourism will be promoted as an alternative to international tourism. We have seen Samhi Hotels, Oyo, Ixigo planning their IPO in 2023. If you look at Easemytrip, which got listed in 2021 has created huge wealth for investors (and is) also announcing high growth in topline and bottomline,” said Manish Khanna, co-founder at Unlisted Assets. The special push to the tourism sector is expected to bring more companies from the tourism sector to the listed space. “We would see many companies in this sector going in for IPO from the unlisted space. Some of the burn companies like Oyo are also expected to be operationally profitable in FY23, which is a huge positive coming out from covid downturn,” said Khanna. However, one thing that will have a negative impact on the tourism industry is the move to increase the tax collected at source (TCS) mandate from 5% to 20% on overseas tour packages. “This will not only increase the upfront cash outflow for customers but will also give an unfair advantage to foreign-based online travel booking platforms over India-based travel agents and tour operators,” said Rajesh Magow, co-founder and group CEO of MakeMyTrip. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[]]></cdata></div> SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/budget/news/evs-that-import-parts-to-get-costlier-as-budget-gives-a-boost-to-in-house-manufacturing/articleshow/97529239.cms">EVs that import parts to get costlier as Budget gives a boost to in-house manufacturing</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/budget/news/income-tax-bonanza-capex-push-to-green-energy-budget-2023-summarised/slidelist/97527360.cms">Income tax bonanza, capex push to green energy: Budget 2023 summarised</a>

Budget Impact: 10 stocks that stand to gain from FM’s announcements

If things do not go substantially southwards for the closing days of 2022, Indian bellwether equity indices would end the year with a small gain. This will mark the seventh successive year of positive return. Sensex achieved this once during 1988-1994 and Nifty 50 never saw this, says <keyword id="166529" type="General" weightage="50" keywordseo="sujan-hajra" source="Orion">Sujan Hajra</keyword>, Chief Economist and Executive Director, Anand Rathi Shares and Stock Brokers. "We expect positive equity return to continue during 2023," <keyword id="353796" type="General" weightage="80" keywordseo="hajra" source="Orion">Hajra</keyword> said. Valuation concern-led equity market correction looks unlikely in 2023. Indian mutual funds are receiving annualised $20 billion net SIP inflows. The rising trend remained unscathed despite market volatility. A substantial dip in SIP during 2023 looks unlikely. In each of the three episodes since 2000, when Indian equities registered a net outflow of FII money, the next couple of years witnessed large inflows. The current trends also suggest the possibility of substantial FII equity inflows in 2023, Hajra added. The combination of reasonable fundamentals and valuations coupled with the possibilities of large inflows suggest that equity returns in <keyword id="3658" type="General" weightage="50" keywordseo="india" source="Orion">India</keyword> would be positive in 2023. In view of global concerns, we expect the return to be in line with the long-term averages i.e., 10-13 per cent, Hajra said. Emkay Institutional Equities expects Nifty to attain a level of 19,500 by December 2023 given the current situation. Barring any major change in the global macro-economic and geo-political set-up, Sensex at 64,500 indicates a 7-8 per cent increase from the current levels. Largely, the increase in Nifty-50 profit after tax (PAT) in CY23 will be led by Banks, Auto OEMs and Ancillaries, Oil &amp; Gas, and IT companies. Sanjay Chawla, Head of Institutional Research, Emkay Global Financial Services said, higher-for-longer interest rates and a sudden rise in Brent crude oil prices are potential challenges for the market in the next 6-12 months. A capex-intensive budget by the government may spur investment; however global and domestic growth uncertainties may act as an impediment. Given the current scenario, we see Nifty-50 fair value of around 19,500 by the end CY23; we expect aggregate profit growth of Nifty-50 to be fairly resilient at around 15 per cent in CY23. ICICI Direct said in a note that India fared well both relatively and in absolute terms with respect to economic and stock market performance. "Going ahead, we believe H1CY23 may turn out to be volatile as investors around the globe would seek answers to key puzzles such as (1) How fast interest rate hikes come to a halt globally; (2) Damage to economic growth, more so in developed economies; (3) Lag effect of a rise in interest rates on demand cycle &amp; corporate EPS in India, etc," it added. "However, we believe such volatility will throw up attractive opportunities in domestic-oriented sectors like banks, capital goods, infrastructure and logistics, which will continue to be the beneficiaries of massive <keyword id="46930" type="General" weightage="80" keywordseo="capex" source="Orion">capex</keyword> spend by the government/private sector and recovery in margins/profitability. Apart from these, domestic sectors like retail, real estate, and auto ancillaries (domestic focused) will also provide good opportunities for the medium to long term," ICICI Direct stated. We also highlight the key risks for CY23 that may get manifested in the form of (a) any negative surprise from Covid erupting once again and (b) the continued hawkish stance of central banks, which may derail growth prospects, it said. V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services said three major trends are emerging as the New Year approaches: (1) the impressive credit growth is sustaining; (2) capex is gaining momentum; (3) real estate is picking up. Therefore, financials, capital goods and construction-related stocks are well-positioned to outperform in 2023. In financials, the leading private sector banks have the potential to move up further and PSU banks are short-term trading plays. Axis Securities said in a note that Banking &amp; Financials will be major themes to watch out for in 2023 on account of their improved economic outlook and the pick-up in credit growth. Rural recovery is expected in 2023 led by moderation in inflation, softness in commodity prices, better farm income expectations, and higher government spending. Capital expenditure (especially railway Capex) and Infrastructure spending are likely to be overarching themes. Home improvement theme: With the pick-up in the real estate and housing demand, the home improvement theme has bolstered and would continue to be robust in 2023. The note said a rebound is expected in the <keyword id="6363818" type="General" weightage="50" keywordseo="pharma" source="Orion">Pharma</keyword> sector on account of new launches and gaining market share. High-quality retail play will continue to remain in focus. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/gold-silver-markets-most-likely-to-see-signs-of-exhaustion-in-2023/articleshow/96598428.cms">Gold &amp; silver markets most likely to see signs of exhaustion in 2023</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/indias-current-account-deficit-widens-to-4-4-of-gdp-in-q2-due-to-high-trade-deficit-rbi-data/articleshow/96599506.cms">India's current account deficit widens to 4.4% of GDP in Q2 due to high trade deficit: RBI data</a>

For 2nd time after 1988-94, Sensex on track for 7th successive year of gains

<ul><li>Income tax bonanza for the salaried class and the government’s capital expenditure push have emerged as the stars of Budget 2023-24.</li><li>While the income tax exemptions are expected to increase disposable incomes of taxpayers and thereby boost demand, the capex push is aimed at promoting growth and increasing job opportunities, say experts.</li><li>The government also announced a slew of measures for the agriculture and green energy sectors, promoting the use of technology to boost output and transition to green energy.</li></ul>An upward revision in income tax slabs and a continued push on capital expenditure investments emerged as the key highlights of the Union Budget 2023-24. While the revised tax slabs under the new tax regime will benefit the middle-class and salaried individuals, the government also announced a 33% increase in its capital investment outlay for FY24 to boost growth and promote job creation. “We are steering an ambitious people-centric agenda to address global challenges and to facilitate sustainable economic development,” finance minister Nirmala <keyword id="679937" type="General" weightage="80" keywordseo="sitharaman" source="Orion">Sitharaman</keyword> said, announcing the budget. Despite an increase in capital expenditure outlay, the government has continued on its path of fiscal consolidation. Sitharaman said that while the government will meet the fiscal deficit target of 6.4% in FY23, it has been reduced to 5.9% in FY24, and further below 4.5% in FY 25-26. Sitharaman also announced that the gross borrowings are estimated at ₹15.43 lakh crore in FY24, lower than the Economic Survey 2023 estimate of ₹15.77 lakh crore. “This budget is a Bahubali budget. With one arrow multiple targets are shot. Fiscal prudence is achieved with lower deficit and path set till FY26. Consumption is supported through tax cuts. Investment outlay is enhanced. Numbers are realistic or conservative to enhance the credibility,” said Nilesh Shah, managing director, Kotak Mahindra Asset Management Company. <cmsannotation type="cmsannotation" annotationid="Here are all the major announcements of Budget 2023-24" comment="subhead" text="Here are all the major announcements of Budget 2023-24">Here are all the major announcements of Budget 2023-24</cmsannotation> Slabs for income tax computation enhanced under the new regime: Under the new income tax regime, individuals with an annual income of up to ₹9 lakh will now have to pay an income tax of ₹45,000, which is an effective tax rate of 5%. The government has also increased the limit for rebate under section 87A of the Income Tax Act to ₹7 lakh from ₹5 lakh earlier. The following are the new tax slabs: <table style="border-width: initial; border-style: none;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Slab </td><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Tax rate </td></tr><tr><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹0-3 lakh </td><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nil </td></tr><tr><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹3-6 lakh </td><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">5% </td></tr><tr><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹6-9 lakh </td><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">10% </td></tr><tr><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹9-12 lakh </td><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">15% </td></tr><tr><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹12-15 lakh </td><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">20% </td></tr><tr><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹15 lakh and above </td><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30% </td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table> In addition to this, there’s good news for salaried individuals as well, with the standard deduction being hiked to ₹52,500 from ₹50,000 earlier. Further, the tax exemption limit for leave encashment has been raised from ₹3 lakh to ₹25 lakh. Lastly, the new income tax regime will be applicable by default going forward. However, assessees will have an option to opt out and file their returns under the old regime. “More money in the hands of the middle class will have a cascading effect across the economy which needs this push as we continue to depend on domestic demand to beat the global uncertainty,” Sanjeev Krishan, chairperson, PwC in India. Capital expenditure outlay gets a major boost: In a bid to promote growth and job creation, the government has announced a 33% increase in capital expenditure outlay to ₹10 lakh crore for FY24, or about 3.3% of the gross domestic product (GDP). The capex outlay for FY23 is estimated at ₹7.5 lakh crore. Sitharaman outlined that infrastructure is one of the seven priorities of the government, which is now backed by the 33% increase in capex outlay for this segment. Overall, the government’s capex outlay has increased over three-fold from ₹3.1 lakh crore in FY19 to ₹10 lakh crore in FY24. Here’s how the government’s capex spending has trended since 2019 <div type="image" title="Capex spending FY19-FY24." msid="97524051" hostid="261" sizebytes="16064" caption="&amp;lt;p&amp;gt;Indian government&amp;#39;s capex spending trends since FY19&amp;lt;/p&amp;gt;"></div> “This is a positive development for domestic commercial vehicle space and more so for medium and heavy commercial vehicle (M&amp;HCV) domain,” said ICICI Direct. The government announced an allocation of ₹2.7 lakh crore for roadways and ₹2.4 lakh crore for railways. “A 33% increase in capital expenditure to ₹10 lakh crore, the highest ever, will go a long way in building roads, ports, and airports — crucial for making India a reliable investment destination. Investment of ₹2.4 lakh crore in railways is commendable,” said Anand Rathi, founder and chairman, Anand Rathi Group. Apart from this, Sitharaman also announced an outlay of ₹10,000 crore per annum to develop urban infrastructure. The government has also announced a 66% increase in funding for the PM Awaas Yojana to ₹79,000 crore in FY24, which will benefit engineering, production and construction companies. Further detailing the infrastructure push, Sitharaman said that the government has identified 100 critical transport infrastructure projects for steel, ports, fertilizers and other sectors with an investment outlay of ₹75,000 crore, which includes a private sector investment of ₹15,000 crore. Agri Accelerator Fund to encourage innovation: In a bid to promote the adoption of technology in the agriculture sector, the government announced a new Agri Accelerator Fund to promote agri-tech startups in rural areas, with a cluster-based and value chain approach through public-private partnerships. “The proposal to set up an Agri Accelerator Fund for agri-tech startups is a welcome move, and was much anticipated. Agri-tech startups who are focusing on improving the market reach for agricultural products and produce, as well as last mile delivery of products to farmers should benefit from this move,” said Raj Ramachandran, partner, JSA. Sitharaman also announced a slew of measures for the agriculture sector, which are: <ul><li>Increase in agriculture credit target to ₹20 lakh crore, with a special focus on animal husbandry, dairy and fisheries.</li><li>A new sub-scheme of PM Matsya Sampada Yojana with a targeted investment of ₹6,000 crore to further enable activities of fishermen and fish vendors.</li><li>Computerisation of 63,000 primary agricultural credit societies with an investment outlay of ₹2,516 crore.</li></ul>Green energy ambitions get a boost: The government also announced a slew of measures to encourage and promote green energy in India, including ₹35,000 crore priority capital for transition from fossil fuels to green energy. Of this, the specific outlay for National Hydrogen Mission has been set at ₹19,700 crore. The government has set a target of 5 million metric tonnes of hydrogen production capacity by 2030. Key players in the hydrogen space are Mukesh Ambani and Gautam Adani. Their green energy bets, primarily based on green and blue hydrogen, amount to $125 billion. <cmsannotation type="cmsannotation" annotationid="‘Force multiplier’ budget, say analysts" comment="subhead" text="‘Force multiplier’ budget, say analysts">‘Force multiplier’ budget, say analysts</cmsannotation> Overall, the budget has been well-received by experts, with the broad consensus being that this is a growth-oriented budget. “Growth with fiscal consolidation continues to be the continuing theme with capital expenditure at 3.3% of GDP while being committed to the long term 4.5% deficit target. Providing more incentives under the new tax regime to middle class Indians, will also widen the net of those who can invest,” said Radhika Gupta, MD and CEO, Edelweiss Asset Management. Sensex zoomed 1,180 points reacting to the tax announcements made by the government. The tax exemptions under the new regime will increase the disposable income in the hands of taxpayers, according to ICICI Securities, helping boost demand. “In keeping with its focus on inclusive growth, the Union Budget has hiked outlays on infrastructure and agriculture which in our view would have a force multiplier impact on the economy,” said S Ranganathan, head of research at LKP Securities. According to economists, the reduction in fiscal deficit targets for FY24 through FY26 will also offer relief for bond markets, with the 10-year bond yield projected to moderate to 7-7.1% in FY24, according to Abheek Barua, chief economist, HDFC Bank. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/sensex-zooms-as-finance-minister-delivers-tax-bonanza-to-middle-class/articleshow/97510050.cms">Sensex zooms 1,180 points as FM delivers tax bonanza to middle-class</a> <a href="https://www.businessinsider.in/budget/news/budget-2023-24-nirmala-sitharaman-speech-highlights-and-updates/articleshow/97512649.cms">Budget 2023-24 highlights: Those with income below ₹7 lakh a year need not pay income tax</a> <a href="https://www.businessinsider.in/budget/news/government-to-set-up-three-centres-of-excellence-in-artificial-intelligence/articleshow/97520242.cms">Budget 2023 gives a boost to artificial intelligence – government to set up three centers of excellence</a>

Income tax bonanza, capex push emerge as the stars of Budget 2023-24

<ul><li>India’s investments into <keyword id="3347616" type="General" weightage="20" keywordseo="fixed-assets" source="Orion">fixed assets</keyword> has hit a decadal high in the fourth quarter of FY23. </li><li>In the last quarter of FY23, government capex was up ove 20% compared to the same period a year before. Private entities too will follow suit, says Nirmal Bang. </li><li>Improving affordability and rising loan tenures could possibly sustain a multi-year residential real estate cycle. </li></ul>India’s investments into fixed assets hit a decadal high in the fourth quarter of FY23. Measured in terms of Gross Fixed Capital Formation (GFCF) — which is investments of producers in fixed assets — it’s now at a high of 35.3% of India’s gross domestic product (GDP), as per a research report by Nirmal Bang. The trigger to this high is the Indian government raising its spending. In the last quarter of FY23, its capex was up by 22.9% YoY. Going ahead, the research firm believes that private entities too will go in for capacity expansion —- as capacity utilization of industries is now hovering between 74-75% in the last one year on an average. “Private capex announcements in FY23 more than doubled from pre-pandemic levels and are running ahead of the central and state governments,” said a Nirmal Bang report named India Capex Meter. Overall, new capex crossed the pre-pandemic peak and stood at around ₹12 lakh crore tn in 4QFY23, according to data from CMIE. Multi-year residential real estate cycle Real mortgage rates have risen over the past year, but a structural downtrend persists. The report finds that the Indian household capex has held on, aiding growth in the housing sector. While it did flatten out recently due to rising interest rates, growth in housing credit could possibly sustain marginally above system credit growth, Nirmal Bang believes. “This, along with improving affordability and rising loan tenures could possibly sustain a multi- year residential real estate cycle,” it adds. For corporates, however, real interest rates have recently turned slightly adverse, rising above their long-term trend. This however is unlikely to be a major deterrent in the near term since the initial leg of private capex recovery is unlikely to be bank funded. Capital goods sector Most of the capex indicators have remained in positive territory over the past year, the most significant being the capital goods sector – that builds industries. “While the central government’s persistent capex focus provided the initial thrust, indicators such as capital goods production and capital goods imports too have sustained in the positive territory over the past year,” the report said. Yet another indicator, that’s – the profitability of the capital goods sector has also improved. “Operating profitability of BSE Capital Goods companies has sustained in the positive territory despite persistent pressure on margins. Over the past two quarters, operating profitability of the BSE Capital Goods companies has grown by over 15% YoY,” said Nirmal Bang. There’s more steam left? State and central governments have been steadily spending on building road projects. The road construction has been robust, but the nature of investment into the sector seems to be changing. While state and central governments seem to be slowing down, the <keyword id="53482" type="General" weightage="20" keywordseo="private-sector" source="Orion">private sector</keyword> is more than making up for it, with project announcements. Bank credit to the sector is also on-point. “Bank credit to the infrastructure sector has seen some sluggishness recently, but bank credit to the roads sector, which is the key beneficiary of government capex, seems to be holding up,” the report said. Manufacturing back to pre-Covid levels Going by the investment proposals, there seems to be a broad-based capex recovery, the research report says. In 4QFY23, investments in the manufacturing sector were about 48% above the pre-Covid level. “Sectors that saw recovery were chemicals, metals, machinery and miscellaneous manufacturing. Investments in food &amp; agro-based products remained below the pre-pandemic level,” said Nirmal Bang. The top sector in terms of investment proposals by value is metals. It is followed by sectors such as sugar, transportation, textiles, drugs &amp; pharmaceuticals, chemicals and fermentation-based pharmaceuticals. Even sectors such as leather are seeing some resurgence, aided by China +1 strategies. The share of sectors like electrical equipment is seen moderating as some of the early Production Linked Incentive (PLI) schemes get implemented. On the other hand, proposals from sectors like food processing and textiles are seen rising.

You Searched For "private capex" and got 12 results

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