What is your call on the Indian markets ahead of the Union Budget next week?
We believe this is a stock picking time, giving us opportunity to buy good stocks at cheap valuations. Fundamentally, things are not bad and valuations are also lucrative; so it’s the right time to enter. However, the trend is more of a stock-specific and not sector-specific. Thus, one has to be careful while accumulating at these levels.
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How do you see the year panning out for emerging markets in general and India in particular?
Indian markets offer growth and the worst is over for the economy. The Government has taken corrective steps to boost growth and will take measures further to bring back investor confidence. This will make India a growth proposition compared to other emerging markets, where one would like to buy at current valuations. However, vis-a-vis China, I would say it’s a different ball game altogether as China is far bigger economy.
How important is the Union Budget for institutional investors and what are your expectations?
Budget will contain certain measures to boost the economy. One such measure will be to contain current account deficit and fiscal deficit, while the second one will be relating to the banking space. The third growth formula will be booster to Infrastructure sector, which will support growth in the economy.
What is your expectation from Reserve Bank of India's monetary policy next month given all this? Do you foresee a growth-oriented stance this time around?
See, inflation is moderating and government is expected to contain fiscal deficit concerns in Budget and we do not see any rise in borrowing figures. Also, the Government has taken adequate measures to phase-out subsidies to bring back growth. Therefore, the RBI too is expected to shift its stance towards growth instead of inflation which is not all a criteria for the central bank to decide on rate cut stance.
What sectors or counters will you be bullish on from a medium-term perspective?
I'm positive on Oil & Gas space with ONGC and Reliance Industries (RIL) on our BUY list. Also finance space looks good, especially, banking and non-banking finance companies (NBFC) as we expect them to benefit from lower interest rate cycle. Infrastructure basket will also get impetus from Budget so we are positive on this sector.