Adani wipeout puts focus on Union Budget 2023 to reignite stock market rally

After a $68 billion rout in Adani Group shares that has helped make India’s stock market the worst performer in Asia this year, investors are looking to government spending to spark a rebound.
Prime Minister Narendra Modi’s government will present its annual budget to the parliament on Wednesday. The plan is expected to boost funds for infrastructure, defense and logistics, providing windfalls for related companies.
“There is a fair chance that the budget will revise sentiment for stocks in India,” said Arun Kejriwal, founder at KRIS, a Mumbai-based investment advisory firm. Tax collections have remained buoyant while capital spending is on top of the government’s agenda, allowing “extra funds for various sectors.”
After outperforming global peers over the past two years, Indian stocks have fallen amid interest-rate hikes, reduced consumption and shifting investor preference as China reopens. Most recently sentiment has suffered from a short-seller campaign against Gautam Adani’s business empire.

Here are some of the key areas investor will be focusing on in PM Modi’s latest budget:
Infrastructure
Infrastructure spending, especially on roads and railways, is likely to be increased by about 15%, Jefferies Financial Group analysts led by Mahesh Nandurkar wrote in a note. Cement companies should be among the beneficiaries.
Stocks in focus include: Ultratech Cement, Rail Vikas Nigam, IRB Infrastructure Developers.
Defense
Analysts expect the government to raise the Budget for local manufacturing in the defense sector as the country aims to reduce its reliance on imports. India has also grown its exports of weapons in recent years.
Stocks in focus include: Hindustan Aeronautics, Bharat Dynamics, Mazagon Dock Shipbuilders.
Logistics
The government is seen increasing allocations for logistics parks, dedicated freight corridors and cold storage as part of plans to make India a global economic powerhouse.
Stocks in focus include: Container Corp of India, Allcargo Logistics, Delhivery
Manufacturing
The government has been spending to encourage companies to manufacture more in India, including through so-called production-linked incentives.
Outlays could be increased in existing sectors including IT hardware, mobile and air conditioners, and expanded to new areas such as grid-scale battery storage systems and 5G equipment, according to analysts at Mumbai-based brokerage Sharekhan.
Stocks in focus include: Reliance Industries, Suzlon, Dr Reddy’s Laboratories, SRF, Trident
Others
Other possible measures in the budget include efforts to boost consumption and facilitate investing. The latter may feature changes to taxes on long-term capital gains from various asset classes.