Budget 2022: Shares of cement and infrastructure surge as budget gets massive capex

The FM fixed the outlay on capital expenditure for next year at Rs.7.5 lakh crore, sharply higher than the Rs.5.5 lakh crore budgeted for 2021-22

The FM fixed the outlay on capital expenditure for next year at Rs.7.5 lakh crore, sharply higher than the Rs.5.5 lakh crore budgeted for 2021-22
The FM fixed the outlay on capital expenditure for next year at Rs.7.5 lakh crore, sharply higher than the Rs.5.5 lakh crore budgeted for 2021-22

Budget 2022: As Union Budget gives massive capex; infra, cement stocks trigger

After the Union Budget for 2022-23 was announced today in which a strong capital expenditure coupled with a renewed focus on the affordable housing segment has led to a sharp jump in share prices of companies associated with infrastructure, realty, cement, steel, and other commodity-focused businesses.

To sustain a high growth rate, the Centre has earmarked a massive budgetary outlay of Rs.7.50 lakh crore for FY23. In her Budget speech, Nirmala Sitharaman proposed to increase the capital budget outlay by over 35 percent year on year. The government has also allotted Rs.48,000 crore for housing projects under the affordable housing scheme.

The large capex outlay is seen as a major boost for infrastructure companies as it will boost their order books going ahead because of greater government project tendering activity.

There were predictions by the analysts that the government would hike the capital expenditure outlay by 20 percent, whereas Budget 2022 has hiked the expenditure by 35 percent.

Shares of cement and infrastructure stocks were in demand after Finance Minister Nirmala Sitharaman sharply increased the outlay on capital expenditure for 2022-23 in the Union Budget.

The shares of infrastructure company Larsen & Toubro rose over 4 percent, whereas realty major DLF rose over 3 percent. The steelmaker JSW Steel rose nearly 4 percent, whereas the Steel Authority of India rose 5 percent.

In the cement space, Shree Cement rose 5 percent, ULtraTech Cement 4 percent, Ambuja Cement 4 percent, and The Ramco Cements over 3 percent.

The stocks of Housing finance company Aavas Financiers rose 6 percent.

While presenting the budget, Finance Minister Nirmala Sitharaman said, “The Central government will work with the state governments for reduction of time required for all land and construction-related approvals, for promoting affordable housing for the middle class and economically weaker sections in urban areas. The Centre shall also work with the financial sector regulators to expand access to capital along with the reduction in the cost of intermediation.”

Sitharaman added, “The outlay for capital expenditure in the Union Budget is being stepped up sharply by 35.4 percent from Rs.5.54 lakh crore in the current year to Rs.7.50 lakh crore in 2022-23.”

Chief Investment Strategist at Geojit Financial Services, V K Vijayakumar said,
“Overcoming the temptation to garner some votes through populist proposals, the Finance Minister has presented a visionary economic document to boost economic growth. By increasing the capex by 35.4 percent to 7.5 lakh crore, thereby targeting an effective capex of 10.7 lakh crore, the government has declared that it would be doing the heavy lifting to achieve 8 to 8.5 percent GDP growth in FY 23.”

Vijayakumar said the government has balanced growth with welfare programmes for the poor with Rs.48,000 crore allocated for PM Awas Yojana and Rs.6,0000 crore for tap water connection to 3.8 lakh poor households. In brief, (this is) a non-populist growth-oriented Budget, he added.

According to Anuj Puri, Chairman, ANAROCK Group: “Providing a broad-spectrum booster shot to the economy, Union Budget 2022-23 is progressive — especially with its emphasis on building the infrastructure of the country.

“The Finance Minister clearly emphasized the top priorities of the government – PM Gati Shakti for sustainable growth, inclusive development, productivity enhancement, and financing of investments.”

The rise in capex is a positive for long steel and pipe manufacturers, said Priyesh Ruparelia, Vice President and Co-Group Head, Corporate Ratings, at ICRA.

“Moreover, focus on Aatmanirbharta, especially in defence and solar module manufacturing remains incrementally positive for domestic steel demand. On the raw material side, the extension of Customs duty waiver on ferrous scrap in FY2023 is a welcome development for secondary steel manufacturers,” Ruparelia added.

However, withdrawal of antidumping and countervailing duty protection on certain stainless steel and coated steel products remains the only negatives that have been announced on Tuesday, Ruparelia added.

[With Inputs from IANS]

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  1. Unhappy NO channel broadcasted the views of
    1) Kapil Sibal
    2) Kujriwaal
    3) Sitaram Yechury
    4) Mumtaz Didi also said it is Zero sum for middle class. Her Bengal budget is also zero sum for the state is nearly bankrupt for funds
    5) DMK Stalin
    6) Pinarayi Vijayan
    It means there is total blackout by the media and it is BJP game plan to silence everybody
    Unhappy & cannot get sleep for next one week…..

  2. 1) No mention of % grace marks to be given in +2 exams
    2) No mention of BC reservation quota in NEET exams & scores
    3) NO mention of modernizing kendriya vidyalas with e-learning facilities
    4) NO mention of having a centralized digital library (USA Congress Library)
    5) Lauch of digital currency to catch bribers & bribe takers and do money trailing
    6) NO mention of revitalising BSNL
    7) NO tax concessions to middle class, except to think of Char-Dham yojna
    I fully support Pappu’s criticism that it is zero sum for middle class. Ofcourse Pappu is top class.
    How can anyone understand when Pappu does not understand ?? Something is seriously flawed in the budget


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