Avendus Capital's Vaibhav Sanghavi on Budget expectations

Q1: It has been a rollercoaster ride for the markets over the past few sessions. Are they nervous ahead of the Budget presentation on February 1 or is to more to do with global factors?
Ans:
>Market nervousness more to do with global factors, especially the US Fed policy
>Street now expects more hikes in 2022 than envisaged in 2021
>Lot to look forward to in the Union Budget
 
 
Q2: So, what are the markets expecting from the budget this time around?
>More to do with continuation of existing policies, especially ease of doing business
>Continued rationalisation of income-tax and taxes on fuel
>Emphasis on capex programs, spending, rural push
>Focus on COP and climate change
 
 
Q3: How much fiscal room does the government have to do all this?
>Robust tax collections to help spending push
>Fiscal expenditure should not be inflationary
>Fiscal deficit should not be an issue


Q4: Given that the retail investors have been a big part of the market rally, what can they expect?
Ans:
>Most of the things are in place to grow their pool
>Hope for continuation of existing policies
>Financialisation of savings will continue
 
 
Q5: And how should one position in the markets ahead of the D-day?
Ans:
>US Fed policy outcome is important and will impact sentiment
>Budget an important event; continuity in existing policies will be appreciated by the markets
>US Fed outcome can trigger volatility and correction
>Expect the second half of 2022 to be good for emerging markets, including India

Watch video