Budget won't move mkt; buy education, irrigation: Kotak Sec

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With the Union Budget, what is the stock market pricing in and how will it move post budget? Not much, said Shashank Khade, VP - Portfolio Management Services, Kotak Securities, in an exclusive interview to CNBC-TV18. The key cues to watch out for, though, would be how the government tackles the issue of fiscal deficit and disinvestment, Khade said.

"If government comes out to be positive in terms of fiscal deficit or for that matter what it intends to do for infrastructure and it is far more clear in terms of what it intends to do in the next couple of quarters, then, I think, it will be mildly positive but I'm not sure whether there will be drastic moves because of the budget per se," Khade said.

On sectors that may be in news due to the budget, he said: "Irrigation and education have always been the best favourites post or pre-budget because most traders punt on these sectors whenever there is any positive statement made during the budget."

Here is a verbatim transcript of Shashank Khade's exclusive interview on CNBC-TV18. Also watch the accompanying video.

Q: How are you feeling going into the budget? One opinion is suggesting that post Budget, the markets are more prone to slipping down rather than moving up, would you agree with that assessment?

A: No. We have had two events in this quarter, one was government formation and the other is the budget. While there were no expectations from the government formation and it positively surprised the market, we got 40 days to keep discounting what can come out of the budget.

Every week, we saw different expectations coming out of different sectors, different companies which could go for disinvestments. We have scratched hard and possibly looked at the blue sky scenario of a budget. My sense is that with so many expectations, I'm not sure what and how much would be the extent of positive surprise that the budget could possibly present. Of course, the markets may want it to go past as quickly because at least the uncertainty goes away and one can start thinking about the earnings quarter as well as starting to look at how the reform process starts off from budget onward.

The government, I think, will get into the action post-budget. The budget would be an important event to go past right now. I'm not sure how much would be the downside momentum - or for that matter even the upside momentum - could be because throughout June, the markets did nothing. Post the euphoric May 19, the Sensex has lost about 1%. One needs to see whether 17-18% upside, which we saw post the government formation, can that hold and give us a positive surprise from there. So that is how the markets are stacking up right now.

Q: Any clear spaces you think will be beneficiaries of the budget because oil, education etc have made small moves? So would you bet on anything getting a clear boost?

A: Over the last 30 days, we went through cycles in terms of discounting the positive. I am not sure in terms of any sectors has been left behind in terms of an immediate upmove after the budget. Education or healthcare has been talked about quite a bit and outlays are being talked about for these sectors. Irrigation and education have always been the best favourites post or pre-budget because most traders punt on these sectors whenever there is any positive statement made during the budget.

However, I am not sure whether life changes for these sectors immediately and neither are investments made based on outlays, which take a long time to fructify. So post budget, one would have to look at how the government manages the tight rope between taking care of the rating agencies on one hand and taking care of the growth impetus to the economy on the other. One has to see how the equation is in terms of what the government is presenting because everyone today expects everything for each sector. A stimulus is expected by each and every sector - for that matter, a rollback of duties is not wanted by many other sectors that have been affected. One cannot single out any single positive or speculate on a positive that can happen. The disinvestment number is still a wide blackbox - Rs 20,000 to 40,000 crore estimates have been put out. One doesn't know what sort of numbers are going to come out but I think one would be happy to see a proper roadmap in terms of a pattern, in terms of what disinvestment - how the disinvestment programme would unfold over the next five years rather than just having a number being plugged in and certain companies being talked about. I think that would be extremely crucial from a budget perspective as well as for long-term investors who chip in into the Indian markets.

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