Budget 2013: Sector expectations and likely impact on stocks

Banking
Expectation: To allow banks to float tax-free infrastructure bonds or other source of long term funding with tax incentive to address long term funding needs; issuing of Banking Licences.
Probability of Outcome: Medium
Impact on Sector: Positive for banks, as this has been a long standing demand and would address asset-liability mismatch. New Bank lincenses Negative for incumbent banks as it would increase competition.
Capital Goods
Expectation: Extension of Levy of import duty on power transmission equipment
Probability of Outcome: Medium
Impact on Sector: If implemented, it would be positive for capital goods
Impact on Companies:  Positive for all T&D based capital goods companies
Infrastructure
Expectation: Re-introduction Increase of tax-deduction under section 80 CCF
Probability of Outcome: Medium
Impact on Sector: It would increase the debt availability in the sector
Impact on Companies: Positive for Infra developers
Power
Expectation: Extension of existing provision of 10-year tax holiday to 15-Years for Power plants and exempting power projects from service tax net
Probability of Outcome: Low
Impact on Sector: Generators to benefit
Impact on Companies: All utilities
Media
Expectation: Lowering of import duty on Set-top boxes
Probability of Outcome: Low
Impact on Sector: Any cut would be sentimentally positive newsflow for DTH companies
Impact on Companies: Positive for Dish TV, SUN TV
Telecom
Expectation: Incentives to telecom equipment manufacturers
Probability of Outcome: Medium
Impact on Sector: This would be an incentive to vendors to set up manufacturing base in India.
Impact on Companies: Bharti, Idea, Rcom
Real Estate
Expectation: Extension of exemption under section 80IA, Increase in tax rebate limit for interest and principal repayment for purchase of house for self-usage, Extension of 1% interest subvention on home loan and Re-introduction of tax holiday for affordable housing projects.
Probability of Outcome: Low to medium
Impact on Sector: Good for large housing projects, tax rebate positive for end-users and interest subvention postive for positive for low ticket size residential projects.
Impact on Companies: DLF, Ansal, Omaxe, Sobha, Prestige, Oberoi, DLF, Godrej Properties, HDIL, Unitech, Ansal, Parsvnath, DLF, Unitech
Oil & Gas
Expectation: Additional excise duty on diesel cars; Export parity on refined products vs trade parity currently
Probability of Outcome: High; Medium
Impact on Sector: Government to benefit fully, and OMCs partially since. Carmakers would be hurt
Impact on Companies: Positive for MRPL, Chennai Petroleum. Mildly negative for RIL, Essar Oil.
Pharma & Healthcare
Expectation: Currently a weighted tax deduction of 200 percent for R&D expenditure in an in-house facility is available. Industry is requesting for it to go up further (to 250-300%) and exemption being made available for expense in external R&D as well.
Probability of Outcome: Medium
Impact on Sector: Positive, as it would encourage higher spending on building new drug Pipeline, which is critical for the sector All Pharma
Metal & Mining
Expectation: Change in guidelines for dividend payout by PSUs, increasing it from current 20% of PAT/ equity; Continued divestments in FY14
Probability of Outcome: High
Impact on Sector: Given the budget deficit, chances guideline changes are high, so that government can reap special dividends; Large cap PSUs can benefit from increase in free float and liquidity.
Impact on Companies: NMDC, COAL, SAIL
Auto
Expectation: Marginal hike in excise duty; Duty on diesel vehicle
Probability of Outcome: Low
Impact on Sector: Given the weakness in auto industry sales, an excise duty hike is unlikely and a pass-through would further delay the demand recovery in the sector.
Impact on Companies: Negative for Maruti Suzuki, Tata Motors, Mahindra and Mahindra, Bajaj Auto, Ashok Leyland
Cement
Expectation: Increase in excise duty
Probability of Outcome: Medium
Impact on Sector: High prices in cement sector may see the government increase excise duty
Impact on Companies: Negative for ACC, Grasim, Ultratech Cement Andhra Cement, India Cements