Budget 2023: Infrastructure, green energy, and banking sector funds will benefit

Budget 2023 made allocations to many sectors. We analyse how these allocations will benefit the infrastructure, power, and banking sector funds.

infrastructure green energy and banking sector

During her Budget 2023 speech, the Finance Minister made many announcements that will benefit specific sectors. In this article, we will understand how budgetary allocations will benefit sectors like infrastructure, green energy, banking, etc.

Budget 2023: Sectoral funds that investors can bet on

While the Budget 2023 allocations will benefit many sectors, we will focus on three of them in this article. Mutual fund investors can bet on the following sectoral funds.

1) Infrastructure
The government has decided to increase the capital expenditure outlay to Rs. 10 lakh crores in 2023-24. It is an increment of 37.4% compared to Rs. 7.28 lakh crore in the previous year.

Chart: Trends in capital expenditure

Trends in capital expenditure

(Source: https://pib.gov.in/PressReleasePage.aspx?PRID=1895279)

The above chart shows how the government’s capital expenditure has more than doubled in the last four years. The money goes towards building infrastructure like airports, railways, metro railways, roads, seaports, hospitals, power plants, etc.

Companies that build infrastructure, such as L&T, J Kumar Infraprojects, GMR group, Adani group, etc., will benefit from this. Companies that supply building materials such as cement, sand, aluminium, steel, copper, zinc, etc., required for building general infrastructure will also benefit. Mutual fund investors can bet on infrastructure mutual funds to benefit from this opportunity.

Also Read: Mutual Funds: A Powerful Investment Tool For Single Mothers

2) Green energy
Decarbonisation will emerge as a big theme in 2023 and the years ahead. Individuals, companies, and governments are looking at ways to reduce or eliminate their carbon footprint. Various companies and governments are looking at building green energy sources such as solar, hydro, wind, hydrogen, etc.

The Budget 2023 allocated Rs. 35,000 crores for various initiatives to be taken under the green energy mission. Before that, the government had approved the National Green Hydrogen Mission with an outlay of Rs. 19,744 crores. Various companies, such as Reliance Industries, Tata Power, NTPC, Powergrid, etc., working on developing and implementing various green energy solutions will benefit. Mutual fund investors can consider investing in power sector funds or thematic funds focused on green energy to benefit from the green energy theme.

3) Banking
The various budget announcements related to infrastructure, green energy and other sectors will benefit the banking sector. Investments in various sectors will create demand for bank credit. Also, in the last few years, banks have cleaned up their balance sheets with NPAs at multi-year lows. Good credit growth and low NPAs augur well for the growth of the banking sector. Hence, investors may bet on banking sector mutual funds.

Along with the banking stocks, the overall BFSI industry, which includes stocks from insurance companies, AMCs, brokers, etc., is expected to benefit if capital markets remain buoyant.

Also Read: What Are Thematic Funds?

Sectoral/thematic funds can form a small part of your portfolio

While Budget 2023 allocations will benefit specific sectors/themes, investors should not over-invest in them. You may allocate a small part (5-15%) of your overall equity portfolio to sectoral/thematic funds. The remaining portfolio should comprise diversified mutual funds based on market capitalisation. A combination of diversified funds and sectoral/thematic funds can be used for long-term wealth creation.

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.


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