“If you look at current markets, we suggest a 100% allocation in a month. There is a huge investment opportunity coming from this market correction,” says Divam Sharma, smallcase manager & Co founder, Green Portfolio.
In an interview with ETMarkets, Sharma said: “Allocation could be made towards stocks in the chemicals, textiles, infrastructure and capital goods space” Edited excerpts –
What is your take on the Budget 2023? Do you think the govt was able to walk the talk and keep the growth agenda in mind?
Yes definitely, it was a very balanced budget with growth as the north star. Long-term infrastructure creation, focus on human capital development, and ensuring a GDP multiplier effect from agri-sector spend and tax rate cuts remained in focus.
We have been expecting a correction post budget as we discussed in prior interviews.
Short term, markets are in a tussle between the FPI’s which are shorting the markets, and the DII’s who are buying the dips.
Also, there would be some reallocation of India holdings for global funds considering developments around the Adani group.
Which sectors are likely to benefit the most from the Budget 2023?
Automobile sector will benefit from the scrapping of Government vehicles and higher disposable income for the taxpayers. Thrust on infrastructure, logistics will push CV’s.
The consumer discretionary sector should benefit from a higher disposable income from the tax cuts.
Do you think the Budget 2023 had something for the common man?
This budget will ensure tax savings of up to 25%. This should ensure a higher savings and should also positively impact discretionary spending.
The focus is on a new tax regime with a higher standard deduction while the slabs in the old regime are also rationalized.
Insurance deduction disallowance of over Rs. 5 lakhs is a dampener as tax incentive is a big value for investing in insurance.
The budget reassures India’s stand as a strong growth economy. The targeted fiscal deficit of 5.9% for FY23-24 and 4.5% for FY25-26 will be a huge positive for the economy.
The impact on GDP growth from capital expenditure, thrust on agri sector, and tax cuts will be seen over the coming year.
Also, there were no negative surprises in this budget, especially on the capital gains tax front.
Considering the comfort of current valuations, and positivity around the budget announcements, it is further reassuring for Indian equities to offer huge wealth creation over the coming years.
We like Titagarh Wagons NSE 4.98 %, CESC NSE -0.28 %, Adani Ports NSE 5.35 %, JSW Energy NSE 3.24 %, and Sterlite Technologies NSE 1.60 % which can benefit from the developments around budget announcements.
If you have 10 lakhs to invest, under usual market conditions we would have asked you to stagger your investments over the next 3-4 months.
The allocation could be made towards stocks in the chemicals, textiles, infrastructure, and capital goods space.
How do you rate Budget on a scale of 1 to 5 and why (5 being the best)
We would say, it’s a 5. The FM has given a very balanced budget and has ticked all the right boxes in managing the fiscal deficit, looking at long-term growth, managing the expectations of taxpayers, and allocation towards the agricultural sector. We are more concerned with how the country’s growth is aided and how it would effect our holdings, which then, yes, it’s a 5.
The FPI flows to India are inevitable now. India is the most lucrative market among the EM pack and will continue to enjoy a higher allocation in the MSCI index.
With the Budget over, US Fed commentary will be an important factor in deciding the trend. What is your take on the US Fed action?
25 bps is factored in by the markets. The Fed will be pushing back against the market expectations that the markets will begin pivoting.
Although, we see that this should not be a major impact on Indian markets and we will take more cues from domestic factors.