Would look for distribution of capital expenditures more towards growth as opposed to subsidies from Budget 2018, said Caesar Maasry, Head of Emerging Market Equity Strategy, Goldman Sachs.
As we count down to the Union Budget 2018, the market is hitting fresh highs.
CNBC-TV18's Latha Venkatesh spoke to Caesar Maasry, Head of Emerging Market Equity Strategy, Goldman Sachs to ask him about his expectation from the Budget, outlook on emerging markets (EMs) and what fund managers are buying in 2018.
He said the house is very positive on the growth story in emerging markets but more so in India specifically. Post the one-off slowdowns with regards to GST, demonetisation, the path for GDP growth is smooth and is likely to be around 7.5 percent for calendar year 2018.
Comparing emerging markets to developed markets, he said due to pick up in topline growth over the last 12-18 months, there has been an improvement in profit margins for corporates.
Therefore, in the macro landscape of strong growth for India, in 2018, one can see out sized earnings growth of about 18 percent for corporates in CY2018.
When asked if they would be putting in fresh money into India and sectoral preferences, he said India remains and overweight market for the and heading into 2018, the dynamics will shift slightly compared to last year – that is last year it was a great for fixed income, this year it could be more equity centric.
The price target on the Nifty for the house is 11600, so there is further upside to come, said Maasry, adding that although they do not have any downside target as such, historically, EM equities have had 10 percent correction during some time of the year expect in 2017.
In terms of sector composition, across EMs, they would tend to rotate into domestic growth oriented names, he said and with regards to India, it would be some industrial names, consumer companies and some banks.Talking about his expectation from Budget 2018, he said they would look for distribution of capital expenditures more towards growth as opposed to subsidies.