Top Stocks Poised to Surge with Middle-Class-Friendly Budget Boost.

If the income tax rate or slab is changed, all stocks that are directed towards consumers should perform well.

According to the GDP data, government capital expenditures have been the primary source of growth, while consumption has remained stagnant. In light of this, and with the RBI providing an extra dividend bonanza totaling more than Rs 1 lakh crore, it is anticipated that the budget will implement tax cuts aimed at providing greater income to the middle class.

The grapevine claims that under the new tax regime, the lowest taxable income slab will increase from Rs 3 lakh to Rs 5 lakh, and the standard deduction, which is currently Rs 50,000, may be quadrupled to Rs 1 lakh.

Due to the rebate under Section 87A for taxable income up to Rs 7 lakh, an individual with gross income of Rs 7.5 lakh is currently exempt from tax under the new regime. However, if the standard deduction is increased, the minimum tax slab is adjusted, and Section 87A is amended, this amount could potentially rise to Rs 10 lakh.

For the average middle-class worker, who makes, say, Rs 15-20 lakh annually in gross wages, we see real advantages.

The middle class may purchase a wider range of goods with more money in their wallets, with a greater proportion going towards discretionary purchases.

STOCKS TO BUY BEFORE BUDGET

HUL, DABUR, EMAMI AND VARUN BEVERAGES

There is some respite for FMCG companies like HUL, Dabur, and Emami that have long struggled with volume. Positive effects should also be felt by Varun Beverages, which is already benefiting from expanded capacity, expanded distribution, and an exceptionally hot summer.

ZOMATO, JUBILIANT FOODWORKS AND DEVYANI INTERNATIONAL

Zomato is expected to gain from the expanding out-of-home food consumption trend, which is rapidly catching up in smaller cities as well. QSRs, including Jubiliant Foodworks (Domino's) and Devyani International's KFC and Pizza Hut, are examples of QSRs.

HERITAGE FOODS

The demand for high-end dairy goods, such as cheese, yoghurt, and flavor-infused milk, is predicted to rise in tandem with increased consumer spending. Heritage Foods is in a great position to profit from this expenditure because of its strong emphasis on value-added products.

TRENT, METRO BRANDS AND ADITYA BIRLA FASHION AND RETAIL

Middle-class customers with more disposable money are probably going to spend more on shoes and clothes, among other discretionary items. This is going to be advantageous for the branded and organised companies in that market, including Trent, Metro Brands, and Aditya Birla Fashion & Retail.

VOLTAS

Air conditioner demand is expanding quickly due to record temperatures and increasing urbanisation. Therefore, Voltas, a well-known AC maker, is an exceptional option.

DALMIA BHARAT, HAVELLS INDIA, KAJARIA CERAMICS AND CERA SANITARYWARE

Budget 2024's new incentives (like tax breaks and interest rebates on home loans) for middle-class consumers may boost retail demand throughout the real estate value chain and help the top lines of major players in home improvement like Dalmia Bharat, Havells India, Kajaria Ceramics, and Cera Sanitaryware.

BAJAJ-AUTO, HERO MOTOCORP

The demand for two-wheelers (2Ws) rises dramatically as middle-class incomes rise. Greater spending on personal transport is made possible by higher disposable earnings. In addition to offering flexibility in crowded cities, two-wheelers also represent an improved social standing and way of life. Bajaj Auto and Hero Motocorp stand to gain the most from this trend.

BAJAJ FINANCE

One of the biggest NBFCs with a retail concentration, Bajaj Finance, looks to gain from the general trend towards consumption.

INDOGO, IRCTC, LEMON TREE HOTELS, ROYAL ORCHID HOTELS AND SAFARI INDUSTRIES

Ultimately, travel is becoming more and more popular and a fixed part of the budget for middle-class households. The desire for air travel rises dramatically as middle-class wages rise. Interglobe Aviation (IndiGo) is in a great position in this market thanks to improved connectivity. With its monopoly on rail, water, and ticketing, IRCTC should likewise benefit from an improving demand environment. Other related industries that profit include mid-market hotel chains like Lemon Tree Hotels and Royal Orchid Hotels, as well as the mass-to-premium luggage brand Safari.

Author : Prayas Sarkar, MBA Finance,

Post Graduate Programme of Financial Markets