Markets witness lot of volatility on the Budget Day. As Finance Minister announces the outlays for different sectors, the stocks advance and decline depending on the likely benefits or drawbacks they expect to derive from the announcements. Looking at the BSE500 stocks for the past three years, 258 stocks declined on the budget day in 2015. The figure went up to 273 stocks on the budget day in 2016. However, in 2017 only 105 stocks of the BSE500 index declined on the budget day. However, there are stocks that have consistently rallied on the budget day (if it is a trading day or else the subsequent trading day) in the past 3 years and have generated substantial returns (compared to the previous trading day). Looking at budget days from 2015 to 2017, Sensex delivered 0.48 per cent in 2015, -0.66 per cent in 2016 and 1.76 per cent in 2017.
Bajaj Finance: A NBFC engaged in lending and allied activities. Its business verticals includes Consumer Lending, SME Lending, Commercial Lending, Rural Lending, Deposits, and Partnerships and Services. The company has presence in 40 cities in India. According to a report by JM Financials, company will have healthy return ratios driven by robust AUM growth and improvement in credit costs. Looking at the budget day returns, the stock delivered 6.08 per cent in 2015, 2.15 per cent in 2016 and 2.95 per cent in 2017.
Bharat Financial Inclusion: A microfinance company with core business of providing small value loans and other basic financial services to its customers, who are predominantly located in rural areas. The company extends loans to them mainly for use in small businesses or for other income generating activities and not for personal consumption. According to a report by Nirmal Bang, company's higher AUM growth along with the highest return ratios among NBFCs deserves a premium valuation. Given the digital initiatives as well as its expected loan growth momentum, there is huge scope for improvement in operating leverage. In the last 3 years, the stock delivered 5.07 per cent in 2015, 2.61 per cent in 2016 and 8.93 per cent in 2017 on the respective budget days relative to the previous day closing.
Max Financial Services: This is a holding company of Max Life which is a non-bank, private life insurance firm. Max Life is a joint venture with Mitsui Sumitomo Insurance (MSI), a Japan-headquartered global leader in life insurance. According to a report by HDFC Securities, the company has as a well-balanced product mix with a focus on longer duration products. In the last three budgets, the stock gained 4.46 per cent in 2015, 2.81 per cent in 2016 and 3.09 per cent in 2017.
ICICI Bank: India's largest private sector in terms of consolidated assets, it provides a range of banking and financial services, including commercial banking, retail banking, project and corporate finance, working capital finance, insurance, venture capital and private equity, investment banking, broking and treasury products and services. According to a research report by Motilal Oswal, the bank has reported 12 basis points YoY expansion in margins over 1HFY18 to 3.27%, aided by interest on income tax refund, strong CASA growth and continued traction in retail loans. Although, its credit cost is likely to remain elevated in the near term but it is expected to moderate from FY19 onwards. The stock delivered 3.15 per cent on the budget day in 2015, 2.79 per cent in 2016 and 4.4 per cent in 2017.
Hindustan Petroleum Corporation: A Government of India Enterprise with a Navratna Status, it is engaged in the business of refining of crude oil and marketing of petroleum products. According to a research report by Nirmal Bang, proposed ONGC-HPCL merger will lead to balance sheet concerns and will lead to increase in net debt of HPCL, which is a negative trigger. However, the combined entity will have a greater ability to bear risks and improve efficiencies. The stock gained 2.66 per cent on the budget day in 2015, 4.1 per cent in 2016 and 3.04 per cent in 2017.