Budget Selloff Overdone: Defence, Railways Show Strong Spending, Says Dharmesh Kant

• Dharmesh Kant, Head-Research, Chola Securities, believes the post-Budget market fall is short-term, citing strong government spending in defence, railways, and power.
• He emphasizes that actual spending, not just allocation, is critical, noting defence spending was 14% higher than allocated and railway/power sectors also saw strong outlays.
• Defence companies have robust order visibility with a book-to-bill ratio of 4.5x and over ₹3 lakh crore in order books, ensuring strong execution for 2-3 years.
• Hindustan Aeronautics (HAL) is highlighted as a key stock due to valuation comfort and improving engine supply, with the sector expected to compound profitability at 18-20%.
• Railway spending growth is around 11%, with IRCON International noted for its strong order book; PSU banks are recommended for long-term buying despite short-term bond yield impacts.

Why It Matters: Dharmesh Kant suggests the Budget selloff is an overreaction, with defence and railways showing strong spending and growth potential.