The tax collection during the last nine months have been quite robust and much ahead of the budget estimates for the current year. Hence, there is a good possibility that the government may have a fiscal deficit number which is lower than the budgeted and that could be a positive surprise, Raghvendra Nath of Ladderup Wealth Management says in an interview to Moneycontrol.
The Managing Director feels if the budget is pro industry; if there are no significant increase in taxes; if the budget signals higher growth and if the budget estimates for the next year are in line with expectations, the market should give a thumbs up and welcome Budget announcements.
Raghvendra with over 27 years of corporate experience and a deep knowledge of the financial markets believes while there is a good probability that 2023 may also see good returns, the returns shall be more stock specific and not so much at a broader market level.
Will the budget focus more on populist measures especially ahead of States Elections or will it be growth-focussed budget?
Over the years we have seen that most Central Governments maintain a good balance between social and economic objectives during the budget. So I don’t expect this year will be any different. The budget should largely be growth oriented to further the momentum of economic recovery.
In the last two budgets we have seen that the government is actively listening to the industry experts and addressing the gaps in policy and taxation. This budget should ideally further that exercise in bringing industry friendly policies that can bolster overall Economic growth.
Will the government focus more on sectors that generate more employment or sectors that affected the most by pandemic?
After the pandemic hit India in March 2020, the government has been helping affected sectors and industries through various financial measures including credit guarantees and subsidies. I therefore do not think that the budget will have any significant measures for the affected sectors.
I feel that the government is keen on expanding the “Make in India” initiative and we should hope that there would be some measures that can enable substantial increase in capital expenditure by the private sector.
Infrastructure stays one of the core focus areas for the government and we should expect some announcements related to that. After the repeal of the farm laws, that has caused some embarrassment to the government, the budget may have some positive announcements for the farm sector in the budget.
What could be surprising element in budget if any?
The tax collection during the last nine months have been quite robust and much ahead of the budget estimates for the current year. There is a good possibility that the government may have a fiscal deficit number which is lower than the budgeted and that could be a positive surprise.
What could be the factors that can drive the market rally on budget day or persuade FPIs to pump in money on budget day?
Equity markets have a habit of surprising and always react or rally when we least expect them to. So, it is near impossible to say what factors shall make the markets rally on the budget day.
Having said that, if the budget is pro industry; if there are no significant increase in taxes; if the budget signals higher growth and if the budget estimates for the next year are in line with expectations, the market should give a thumbs up and welcome the announcements.
How do you read corporate earnings announced so far, for the December 2021 quarter?
Generally corporate earnings have been following the trends of second quarter and are quite robust. I think that this trend should continue for the next few quarters definitely.
After Budget, what are the other important events or factors to watch out for in the rest of 2023?
On the global front, all eyes are on how the Federal Reserve acts in the United States as it reverses its easy money policy in 2023. This is also true for many other developed countries that have flooded their Economies with liquidity.
A faster than expected pull back of liquidity and tightening of rates can hit the Equity markets hard. From India’s perspective, how RBI manages the monetary policy and the overall credit growth in the economy is something to watch out for.
Do you expect the market to give double-digit return in 2022 and close the year above 21,000 on the Nifty50? Also in 2023, do you think the market will still be worried due to expected three rate hikes by Fed, inflation and Covid?
We have had two amazing years in the Equity markets driven by the economic bounce back, sharp Earnings growth and high liquidity. While there is a good probability that 2023 may also see good returns, the returns shall be more stock specific and not so much at a broader market level. Moreover, we should see much higher volatility in the coming months than what we have seen in the previous two years.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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