Stocks That May Benefit Through Union Budget 2020 Recommendations

Analysts are of the view that this budget would focus on boosting consumer demand through additional tax sops as economic growth falters.

Here are a few stocks that could benefit based on certain hopes from the Union Budget 2020.

Income tax sops

If income tax sops, particularly for the lower tax bracket individuals goes through, we would see significant benefit to companies from the two-wheeler space like Bajaj Auto, TVS Motors, Hero MotoCorp. Apart from this FMCG stocks like Colgate, Hindustan Unilever, Dabur etc., will benefit, due to increase in the disposable income.

Doing away with dividend distribution tax

If the government does away with the dividend distribution tax that is presently paid by companies, it could benefit a host of high dividend paying companies like ONGC, Coal India, Hindustan Zinc, Vedanta etc.

In fact, some of these companies may go out and declare even higher dividends.

Housing sector

It is highly possible that some relief could be provided for the housing sector as well. This could be by way of further enhancing the tax relief on housing loans or re-defining affordable housing.

Several companies that could benefit from the above include names like Sobha, Indiabulls Housing Finance, Purvanakara etc., might benefit.

A word of caution

All the above are merely based on assumptions and are speculative in nature. We do not know what the Union Budget has in store. Given the very delicate situation of the government's finances, one would like to believe that a few giveaways is possible, but, all of them happening would be too far-fetched to imagine.

It is important to tread with extreme caution ahead of the Union Budget. Investors are advised to stick to high quality dividend paying stocks.

In fact, some of the government owned companies, which are paying regular dividends, maybe excellent pick for their dividends and their dividend yields.