A very Happy New Year to you! We hope this year brings to you the best of everything. We hope it also brings you the financial prosperity you have always wanted. We know you have planned this year – the goals you wish to achieve, the vacations you want to have, so on and so forth.
As this January is on the verge of completion and 336 days are left in this year but have you pondered on the financial schemes for these upcoming 336 days? I guess that’s why we’re here. So, let us bring to your knowledge the financial schemes for the year so that you know better ways to plan your business and investments for as Benjamin Franklin said –“An investment in knowledge always pays the best interest.”
The last year has been a roller coaster in terms of financial schemes. There have been too many changes too quickly – be it a balanced budget at the beginning, linking of aadhaar with PAN card, Bharat Mala Pariyojana or Pradhan Mantri Awas Yojana. Here we are to quickly review all investment schemes and reforms for this financial year.
1. Goods & Services Tax (GST)
Remaining one of the most debated and arguably transformative tax reform, owing to which huge investments and resultant financial growth are anticipated in the nation. If we consider it from a layman’s perspective, we can just summarise it as a marked reduction in the tax on goods and purchases. So which sectors would have more impact because of GST?
- Pharma: There has been an overall betterment in Q2FY18 than Q1FY18. Also, the limitations of FY18 were eliminated. A similar improvement can be expected in the coming year as well, or so we hope.
- Consumer durables: The giants like Symphony, TTK prestige, Butterfly Gandhimati and IFB Industries, who were better organized in terms of taxes derived giant benefits.
- FMCG: The initial criticism of GST was limited to an extent after revision of tax rates (from 28 to 18% or even less) on as many as 178 items- chewing gums, beauty products to name a few. FMCG companies including ITC, Dabur, HUL, and Marico thus ensured that the benefit of the same is delivered at the consumer end. Thus their prices were curbed.
2. Banking and Finance
The Sensex bears most burden from this sector with a 40.1% index. Now that the credit growth has improved, corporate loan growth is expected to be better, with retail playing a major factor in governing the same. As compared to others, companies with higher RoAs, CARs will have longer self- funded growth.
NOTE: Do watch out for stocks in Bajaj Finance, ICICI Bank and SBI
3. Electric Vehicles
Even though the government is aspiring to make India a 100% EV nation, there are several hurdles that shall be encountered in the process. Of utmost importance is the fact that there is a clear lack of infrastructure and investment. Thus, better investments are really required if the dream of 100% EV nation has to be accomplished.
CHECKPOINT: Following are the companies which are progressing in the direction of an EV nation:
- Maruti: Already planning to set up a LIB battery plant in Gujarat, with Denso and Toshiba, which would be operable by 2020. So, fingers crossed.
- TVS Motors: Plans on launching an electric two-wheeler by March 2018. Way to go TVS!
- Mahindra and Mahindra: M&M is already acclaimed when it comes to electric cars, for it has been selling lithium-ion electric cars for quite some time. Now that they have had a merger with Ford, the two giants can be expected to work wonders! This might as well give M&M a winning edge owing to its years of experience in the field.
- Motherson Sumi: Will have an upper hand in terms of lightweight and increase in wire harness content.
- Sundram Fasteners: Is staying one step ahead as it has started supplying bevel gear and surge tank cap to Tesla. Whoa!
- Companies with a medium-term impact would be Mahindra CIE, Tube investment, Rico auto, Minda Corporation.
“Not bad” is what we will say.
Thank God for the perpetual warnings on every call that we make about aadhaar, the government has been successful in enrolling 1.18 billion Aadhaar cards till date. It would though be inappropriate to say that aadhaar is mandatory for every financial transaction, it is definitely not quite so in saying that the list of transactions that need aadhaar is at a rising pace. Subsidies, gas connection, financial instrument investments, income tax returns are some of the many domains where aadhaar is required. One great advantage of aadhaar linage would be evasion from taxes as every transaction is being watched!
5. Housing For All
The government has two targets in this regard- one is to construct more than 50 lakh homes in rural areas by March 2018 end and the other is to construct one crore homes overall by March 2019. We are hoping there really would be a “Ghar for every parijan” with this upcoming scheme. But how would it affect the market? We need to consider 3 major sectors to evaluate the same:
- Housing finance companies: The companies which offer debts to Tier 2 and 3 towns, with a lower ticket size (less than 20 lakhs) will benefit the most. LIC Housing, Gruh, Repco are a few of them.
- Cement: More house implies more cement. Thus companies like Ultratech cement, Ambuja cement would have great advantages from the same.
- Plywood and MDF: Another sector that is firmly adhered to housing for all is the plywood sector, which is also anticipated to see a rise. Century Plywood is thus expected to derive profits from increased demand owing to housing schemes.
With RERA, not only the buyers but also the real estate is in prime focus. RERA would ensure complete transparency when it comes to delaying, price etc. Thus the real estate would flourish, besides keeping the spirits of builders and investors high. Brigade Enterprises, Godrej Properties, Oberoi Realty and Sunteck Realty are some of the names which would gain great profits.
Owing to financial services (mobile wallet), India can take digitization to next level. In fact, it has already been doing quite so. Thanks to E-commerce! Even more, progress is expected in the Indian market with digitization. Logistic companies like VRL Logistics and Gati will have many eyes on them. It has been long enough that India has braced ancient techniques. Digitization is all set to be a game changer for India and therefore, India is all set to change the world!
So that was it! Now you know where the progress lies this year. We hope you derive the most from these plans in 2018.