Budget 2014: Nifty likely to touch 8500 by December-end; top five stocks in focus

By Sudhakar Ramasubramanian

The Union Budget presented by the Finance Minister is a blue print for India’s economic growth and development. As you are aware of the current economic situation is characterized by low rate of economic growth, high inflation, high interest rates and a low level of economic and business activity.

The budget has attempted to outline the economic agenda of the new government. The budget has actually unveiled a road map for India’s growth and development. It is a firm step towards a more sustainable development for the country.

The budget seeks to foster a climate which is friendly to savings and investments. This is important for the common investor. The new government with a decisive mandate and a reforms focus has reaffirmed its commitment to continued economic reforms through this budget.
A closer look at the budget statement it can be seen that the quality of government spending is likely to improve drastically- focusing on agriculture, railways, healthcare etc.

Apart from all this, there is significant moneys allocated to power, new and renewable energy, shipping, roads, inland navigation, new airports, rural infrastructure fund and also a fund for warehouse infrastructure.

The capital markets related reforms are indeed interesting – the introduction of uniform KYC, single operating demat account, uniform tax treatment for pension funds and mutual fund linked retirement plans will definitely go a long way in helping Indians to manage their investments and retirement savings better.

Despite the many constraints faced, the FM has extended incentives to the common man to save and invest more. Some of these are - personal income tax exemption limit has been hiked from Rs.2 lakhs to Rs. 2.5 lakhs for individual taxpayers who are below the age of 60 years.

In the case of senior citizens the limit is increased from Rs. 2.5 lakh to Rs.3 lakh. The deduction limit on account of interest on loan in respect of self occupied house property has been revised upwards from Rs. 1.5 lakh to Rs. 2 lakh.

The investment limit under section 80C of the Income-tax Act has been enhanced from Rs. 1 lakh to Rs. 1.5 lakh. The investment in PPF Scheme annual ceiling has also been moved upwards from Rs. 1.5 lakh per annum from Rs. 1 lakh at present.

An illustration is the net benefit an individual investor would get from the modified tax structure.



The budget is expected to help promote a new surge in economic growth which will most likely take the economy out of the current sluggishness. The key to success is the aspect of implementation of reforms.

The recent run up in the equity market is expected to continue as the ground work is now being laid for long term growth that would help a secular bull run as estimated by us earlier.

With positive business sentiment and greater business confidence, there will be revival of the investment cycle over the coming year. At Aditya Birla Money, we have revised our estimates upwards for Nifty from 8200 to 8500 for the year-end.
It is imperative that one should stay invested in the India Growth Story and increase exposure in fundamentally well researched stocks to achieve the financial objectives.

We are positive on sectors like Banking, Infrastructure, Capital Goods, Real Estate, Power and Auto. L&T, Maruti Suzuki, ICICI Bank, Oberoi Reality and ITNL will be ABM’s top picks.”

(The author is MD, Aditya Birla Money Ltd and CEO- Aditya Birla Money Mart Ltd. Views and recommendations expressed in this section are his own and do not represent those of EconomicTimes.com.)