Kenneth Andrade, Head - Investment, IDFC Mutual Fund, said he does not expect a miraculous budget on July 6 and added that it would be more or less inline with expectations. However, he said that disinvestment and sale-off of the PSUs is a step in the right direction.

On the fuel price hike Andrade said that the oil market companies would make a lot of money in the free market environment.

Here is a verbatim transcript of the exclusive interview with Kenneth Andrade on CNBC-TV18. Also watch the accompanying video.

Q: What is your sense of how we are going into the budget, just 24 hours left now?

A: Today’s economic survey was very futuristic looking. Going into the budget we will have to see how much of that they would effectively implement and if the direction is right then at least the expectations haven’t built up and there needs to be some kind of delivery going into the budget. Overall as a platform, we are not expecting anything miraculous to come through in this budget; it will be more or less in line with what expectations have been set so far. We will have to take it and see what they deliver on July 6.

Q: How do you read the news on the oil sector and how would you position yourself there now?

A: In the free market environment all these companies make a lot of money and if that is the way the policy is effectively going, our portfolios will effectively need to get rebalanced accordingly. So these are all baby steps, it leaves a lot in terms of implementation of these strategies going forward. There is value on the table, we have been buyers in the stock over the last couple of months and if the policy is in the right direction, obviously they will become very integral part of the portfolios even in the long-term.

Q: Which stocks have you been buyers of in the last two months?

A: Across the entire public sector undertaking (PSU) space and the oil and gas sector, even if it is the Oil & Natural Gas Corporation (ONGC), GAIL, Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL) also, all oil marketing companies (OMCs) basically.

Q: What would be the two or three bullet points you would watch out for on budget day? Today’s economic policy agenda look like a dream document but for the budget what would be your more realistic one-two expectations?

A: Firstly we need to see how the Finance Minister controls his finances and that is one of the most critical driving factors of how the market will effectively take it. So I think a clear visibility on what the fiscal will look like is something that we would need to keep our eyes open to. Secondly, where will he raise finances from? Quite obviously, they have mentioned something on the disinvestment and sale-off of the PSUs going forward. I think that is probably a step in the right direction as we go forward. That is probably the only way that the government at least in the shorter-term can raise enough amount of capital that comes through. These are some things that more on the fiscal side of the entire environment that we will be looking at.

Q: There has been a very large infra fund that has closed over the past couple of days, is that a space you are looking at carefully now or are you getting uncomfortable about the valuations there?

A: I think the opportunity exists in that space but valuations are close to perfect in that space. You will probably find an opportunity or two but you cannot say that across the entire sector itself. So it has been priced pretty finely, there is a lot of promise that has been held out, there is a lot of execution risk left in the system. So it depends upon how it all plays out together. So valuations are key to at all I would guess in the near-term.

Q: Have you been looking at some of the primary paper that has hit the market though? There is just one big one that closed up recently.

A: We haven’t been looking too much at the primary space at least at the initial public offering (IPOs) or the ones that are not listed. We have taken a look at the one that came through. We have participated to a nominal extent in that one IPO that came through.