Prime Minister Narendra Modi’s Independence Day speech today has set the stage for next-generation economic reforms, notably the simplified GST regime and initiatives geared towards self-reliance and employment. Brokerage firms and market experts have swiftly responded, identifying several sectors and stocks that stand to benefit from these transformative policies.
Focus Sectors After GST and Reform Announcements
1. Banking and Financials:
State Bank of India (SBI) is a favourite among analysts, owing to strong growth in its SME portfolio and stable asset quality. The expected pick-up in consumer spending from the reduction in GST rates should spur demand for loans as well as financial services.
2. Consumption and FMCG:
Hindustan Unilever (HUL) has been suggested by Ashika Global Family Office, aiming ₹2,750 and emphasising the probable favourable effect of rate reductions on daily household items. The GST rates made simple must decrease prices of consumer products, aiding growth in sales volumes for FMCG frontrunners.
3. Auto and Components:
Suprajit Engineering and Shriram Pistons & Rings have been rated ‘Buy’ by Emkay Global with expected returns of 17% and 28%, respectively. Industry expectation of lower GST on auto parts and bullishness over domestic consumption make these choices bright spots in the future.[2]
4. Hospitality and Services:
Jefferies has highlighted Indian Hotels Company Ltd. (IHCL) among its buy suggestions, with up to 54% upside. A resilient hospitality industry is in line with increased travel and leisure expenses after reforms.
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Expert Stock Suggestions
- SBI (State Bank of India): Buy | Target: ₹1,000 (Reason: Robust SME portfolio, excellent asset quality, and estimated earnings growth)
- Reliance Industries: Add | Target: ₹1,605 (Reason: Strong retailing segment, upcoming consumer division demerger, and increasing fuel outlets via Jio-BP)
- InterGlobe Aviation (IndiGo): Buy | Target: ₹7,000 (Reason: Market-leading domestic and international load factors, set for a good half-year)
- HUL (Hindustan Unilever): Buy | Target: ₹2,750 (Reason: GST rate cut to drive volumes of consumer staples.
- Suprajit Engineering: Buy | Target: ₹550 (Reason: Expected sectoral impetus through GST-simplification)
- Shriram Pistons & Rings: Buy | Target: ₹3,050 (Reason: Sector tailwinds and GST-led margin growth)
Indian Hotels Company (IHCL), ONGC, Aavas Financiers, Belrise Industries: All have been recommended by Jefferies in diverse sectors with possible 30%-54% upside, indicating widespread growth drivers in the post-reforms era.
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Self-Reliance, Manufacturing, and Green Energy
Market observers also recommend including portfolio allocation in areas in line with India’s vision of self-reliance, such as electronics manufacturing (Tata Elxsi, Dixon Technologies), domestic defence (BEL, Bharat Dynamics), and clean energy (NTPC, Tata Power). These areas are bound to see longer-term tailwinds as government initiatives centre around import reduction and developing domestic capacity.
Also Read | Reforms and Optimism: Stock Market Take-aways from PM’s Speech
Conclusion
The market is poised for bullish momentum led by reforms promised in PM Modi’s speech. Investors should consider portfolios balanced between blue-chip firms benefiting from immediate GST tailwinds and sectors aligned with India’s strategic growth plans.
