As India and the US moved towards resetting their business relationship, markets are keenly watching for cues on specifics on a host of sectors such as nuclear power, defence production and renewable energy.
Since January 20, companies like L&T, India’s largest engineering company, Siemens India, Moser Baer have already seen sharp rise in their share prices.
Market intermediaries also attributed the jump in share prices to expectations from the budget for 2015-16.
While L&T is up 7% since January 20, shares of Siemens India have surged 11.2% in the same period and Moser Baer, which is in the renewable energy space, was up 10.6%.
“I think there is some progress in the nuclear and defence space and big Indian engineering names will benefit. As for other initiatives like those for Smart Cities, things have only started and there is not much on the ground,” said Nandan Chakraborty, managing director (institutional equity research), Axis Capital.
Prime Minister Narendra Modi Monday promised a predictable tax system, easier rules and an end to red-tape to make India a favoured investment destination.
US President Barack Obama announced $4 billion (about Rs 25,000 crore) in government-backed investments and lending to India.
“All of this (the talks) makes for great copy, but will it make an investor run and buy into a stock? I think that is difficult,” said Nilesh Shah, MD of Kotak Asset Management. “There are certain areas where the gains are likely and in some it looks clear, like the benefits in savings in the technology sector. But I think we will have to wait,” he added.
India and the US have agreed to set up a task force for jointly developing Allahabad, Ajmer and Visakhapatnam as smart cities.
“A lot will depend on what the government addresses the issues in the Budget,” said Ravi Kant Malhan, business development head (smart cities and special projects) for Schneider Electric India, which is bidding for such projects.