Top 3 Small-cap stocks to watch out for in the Budget month!

All eyes would now be on how the government manages the fine balance of propelling economic growth and fiscal management.

Finance Minister Nirmala Sitharaman will present the government’s final full budget on February 1, ahead of the 2024 general elections. It comes at a time when governments are trying to balance supporting the economy amid global headwinds and the road to fiscal consolidation. All eyes would now be on how the government manages the fine balance of propelling economic growth and fiscal management. Meanwhile, the market participants would be waiting that this prolonged consolidation would take a decisive direction as the key trigger point is the Union Budget.

Historically, in 14 out of 22 years, the pre-existing trend has reversed post-budget. At the same time, pre-budget months have a neutral bias, whereas post-budget months have a negative bias. On only seven occasions in the last 26 budget sessions (including ‘vote on account’ budgets), the index moved over 1 per cent to 4 per cent). Even in the 2020 historical fall, the budget acted as a trigger point to it. Let us wait for the triggers this time and we will go according to direction. Whatever the outcome may be, we believe stock specific action would continue on D-Street and here is the list of top three Small-Cap stocks which tend to deliver robust performance in the month of February, historically.

So, here is the list of small-cap stocks to watch out for in Budget 2023 month i.e. February:

Shankara Building Products: As history suggests, the stock, on average, delivered gains of nearly 21 per cent with a positivity rate of 100 per cent in the month of February as out of 5 times, it has ended in green on 5 instances. Hence, keep a close watch on this stock.      

SKF India: Historically, February has been excellent for this stock as out of 21 instances, it managed to deliver positive returns on 14 instances, thereby resulting in a 67 per cent positivity rate. Moreover, the average gains registered by this stock in February are 8.61 per cent while the cherry on top is that its maximum returns for the month of February stand at an eye-popping 30.90  per cent.   

Manappuram Finance: If history is to be believed, then it is likely that the stock might deliver robust performance in February as it has closed positively 14 out of the 21 times in the past. The stock’s average return in February is 12.47 per cent.

Which stock is on your radar for the month of February, share with us in the comment section.