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The week gone by saw benchmark Sensex seeing rangebound movement amid weak global sentiment and stock-specific movement. But 10 constituents of the index managed to give strong weekly returns.

The Sensex settled 0.4% down at 60621.77 points on Friday, and for the week has given 0.6% positive returns.

Among the 10 stocks were

twins – and Housing Development Finance Corp, Larsen & Toubro, , Infosys, , , and the four technology majors – , , , and Infosys.

Shares of HDFC Bank gained momentum as investors were buoyed by the strong earnings of the lender. The stock gained nearly 4% in the week.

L&T shares, which gained more than 4% in the week gone by, also tested a 52-week high of Rs 2,283.50. The stock found interest among investors as the Street is betting on a growth-oriented Budget 2023, with greater emphasis and investments in the infrastructure space.

Further, the government is also widely expected to extend tax sops and incentives to more sectors and sub-sectors under the production-linked incentive scheme.

In order to play on this theme, investors lapped up shares of the engineering behemoth, which is often viewed as India’s proxy to infrastructure development.

Shares of L&T have given index-beating returns for two consecutive years. In 2022, the stock gained more than 11% when Nifty 50 gave about 4% returns. This follows a sharp 47% rise in 2021, which was nearly double of Nifty 50’s upmove.

Despite a cautious guidance, frontline information technology stocks found favour, as many believe that the recent correction in stock prices have largely factored in slowdown concerns.

Given that the risk-reward is favourable for many of them, investors flocked to the sector.

Cigarette major ITC, a stock that usually remains on the sidelines or sees underperformance ahead of the budget, has outperformed the index, gaining about 2%.

After three years of no tinkering, analysts widely expect the government to raise the tax on tobacco and tobacco products in the upcoming budget, but believe it will be to the extent that ITC can absorb it.

The central government levies a National Calamity Contingent Duty (NCCD) on cigarettes, which is subject to changes in the Budget.

NCCD accounts for about 10% of overall taxes on cigarettes, and brokerage Jefferies India is building in a 5% YoY growth in overall tobacco taxes.

If the quantum of hike in tax is around this level, then Jefferies believes ITC can absorb it by passing on to consumers and not seeing any major hit to volumes.

Brokerage house

is bullish on ITC and recommends buying the stock ahead of the budget, for a potential target of Rs 370-385 over the next 3-4 months, implying a 15% upside from the current levels.

The brokerage is also bullish on L&T and has a ‘buy’ rating for the stock.

(data inputs from Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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