July 24, 2024

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Budget 2024: Top Equity, Mutual and Thematic Funds to Invest in for Bumper Gains; Expert Recommends Investment Strategy

Budget 2024: Top Equity, Mutual, and Thematic Funds to Invest in for Bumper Gains

As the Union Budget 2024 approaches, focusing on sectors likely to benefit from government policies can yield promising investment opportunities.

Photo : PTI

As the Indian market reaches new records, investor confidence in the country’s economy continues to grow. This optimism is fueled by the stable, growth-oriented policies of the current government, led by Prime Minister Narendra Modi. Both foreign and domestic institutions have increased their investments, further bolstering the market.

With the Union Budget 2024 set to be presented in the next session of Parliament which is likely to start from July 22, the focus is expected to be on several key sectors: Defence, Infrastructure, Housing Development, Financing, Railways, Engineering, and Green Energy Projects.

Investment expert Priyanshu Mishra, Managing Director, Blue Bell Capital Pvt. Ltd. explored top equity ideas, including stocks and mutual funds, that could be promising investments ahead of the budget announcement.

Budget 2024: Promising Sectors for Investment

1. Defence: With increased government spending anticipated in the defence sector, companies like Bharat Electronics Limited (BEL) and Hindustan Aeronautics Limited (HAL) could see significant growth. These companies stand to benefit from both domestic orders and export opportunities.

2. Infrastructure: The infrastructure sector is always a budget highlight, with potential winners like Larsen & Toubro (L&T) , IRB Infrastructure and GMR Infrastructure. These companies are poised to gain from increased government spending on public projects and urban development.

3. Housing Development: As the government pushes for affordable housing, stocks such as DLF Limited ,Godrej Properties and Phoenix Mills, may be attractive. These companies have a strong presence in both residential and commercial real estate.

4. Financing: Banks and non-banking financial companies (NBFCs) like HDFC Bank, Canara Bank, Power Finance Corporation (PFC) and Bajaj Finance could benefit from policy measures aimed at boosting credit growth and financial inclusion.

5. Railways: With expected investments in railway infrastructure, companies like IRCTC and Rail Vikas Nigam Ltd., IRFC are likely to see growth. These stocks are positioned well to capitalize on modernization and expansion projects.

6. Engineering: The engineering sector, with players like Siemens India and ABB India, is set to gain from increased spending on industrial and manufacturing projects.

7. Green Energy Projects: As India pushes towards renewable energy, companies involved in solar, wind, and other green energy projects, such as Adani Green Energy, Tata Power and JSW energy are promising investment opportunities.

Budget 2024: Mutual Fund Strategies

In terms of mutual funds, thematic and sector funds are trending due to significant investor interest. New Fund Offers (NFOs) in these categories have seen substantial inflows, reflecting confidence in specific sectors’ growth potential. However, these funds come with higher risks compared to diversified mutual funds.

Thematic and Sector Funds

1. Defence Sector Funds: Funds focused on the defence sector could benefit from increased government spending. However, they require careful consideration due to their concentrated exposure. Here’s a new fund in this theme Motilal Oswal Nifty India Defence Index Fund.

2. Infrastructure Funds: Given the government’s emphasis on infrastructure, funds like ICICI Prudential Infrastructure Fund could be strong performers.

3. Green Energy Funds: As renewable energy projects gain momentum, funds like SBI Magnum Equity ESG Fund are worth considering.

4. Power & Infra Fund: Power and infrastructure sector funds like Nippon India Power & Infra Fund.

5. Banking & Finance: Focuses on the financial sector, including banks and NBFCs funds like Aditya Birla Sun Life Banking & Financial Services Fund

Priyanshu Mishra further added that thematic and sector funds should be a small part of a diversified portfolio. These funds are mandated to invest over 80 per cent of their corpus in a specific sector or theme, which can lead to high returns if the sector performs well, but also pose significant risks if it does not. To mitigate risk, it is advised to not allocate a large percentage of your portfolio to these funds. Instead, maintain a diversified portfolio and have the patience to stay invested for the long term.

As the Union Budget 2024 approaches, focusing on sectors likely to benefit from government policies can yield promising investment opportunities. While stocks in defence, infrastructure, housing development, financing, railways, engineering, and green energy are poised for growth, thematic and sector funds offer targeted exposure with higher risk. A balanced, diversified portfolio with a small allocation to these high-potential sectors can provide both stability and growth potential in the evolving market landscape.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of TN Network.)