What Shankar Sharma, Madhu Kela, Sandeep Tandon & Prashant Jain are betting on as markets hit new high

It is a stock market-driven government, and the interim budget was simply a continuation of the presently prevalent policies, according to Shankar Sharma.

The last Budget of the BJP government before the 2024 general elections has passed, leaving market participants with no big surprises. Finance Minister Nirmala Sitharaman did not unveil any major announcements except capital expenditure (Capex) being hiked for the fourth consecutive year to Rs 11.11 lakh crore.

There was a slew of announcements on initiatives for solar energy, railways, EV ecosystem, defence, and tourism among others. However, none of them managed to induce any major movement in benchmark indices Nifty, and Sensex. The Sensex closed 106.81 points or 0.15 percent down at 71,645, and the Nifty fell 36 points or 0.17 percent to 21,689.

Capex impact on largecaps

According to ace investor Shankar Sharma, it is a stock market-driven government, and the interim Budget 2024 was simply a continuation of the presently prevalent policies. The market has not reacted extensively towards the election Budget because the important announcements had already been factored in, he said.

“I do not think that the market has factored in any slippages on the capex front, especially because the fiscal deficit number is quite aggressive," he told Moneycontrol.

Also Read | Madhu Kela’s top three bets: PSU banks, pharma, tourism stocks

According to Sharma, Capex has to be reduced to meet the fiscal deficit target of 4.5 percent in FY26. Capex cannot continue at this breakneck speed. "And when capex spend is dialled down in the upcoming years, largecaps will take the biggest hit. That's why I say that India remains a smallcap market," Sharma said.

Meanwhile, MK Ventures' co-founder Madhusudan Kela noted that the government’s intent to curtail fiscal deficit this year and also give two-year guidance that it will be 4.5 percent is very heartening from not just the market but the country's perspective.

"The move is positive for the market as it will lead to a reasonable amount of borrowing and liquidity being left for banks and private sector companies to look for their capital requirements," he told Moneycontrol.

Themes to watch after Budget?

Prashant Jain of 3P Investment Managers believes that given the scale at which the government is planning the solar rooftop plan, the utility space will become crowded. "I doubt if any good investment opportunities will arise in that (utilities) space," said Jain in a conversation with Moneycontrol on February 1. However, he sees some good investment options in the utilities supply side.

Sandeep Tandon, Founder of the Quant Group said that traditional themes will continue. On the stocks or themes to bet on, he told Moneycontrol that the main hunting ground for the decade belongs to value as a thesis, which has potential. "We are very constructive on PSUs and see deep value, but only larger names and not smaller names," he said.

"We see value in cement too, and even in stocks linked to precious metals, base metals, ferrous and non-ferrous. So cement, PSUs, and to some extent, construction, and EPC companies also look good. Capital goods might peak out now in the near term, but looking good from the long-term perspective. So, I will remain focussed on energy, power, PSUs, metal and cement as a theme. These are the larger themes which I would like to stick to," Sandeep said.

Also Read | Housing, Renewable Energy, PSU Banks among stocks that gained from Interim Budget

The FM's Budget Speech mentioned that the election Budget focused on the promotion of tourism. States will be urged to build tourism destinations to attract tourists and foster local commercial prospects. They will receive interest-free loans to promote tourism in their areas.

"All of these announcements will be beneficial for companies in the travel, tourism and hospitality space. Companies like IRCTC, Ease My Trip, Yatra Online, Indian Hotel Company, and Mahindra Hotels could be in the limelight," said Raj Gaikar, Research Analyst at SAMCO Securities.

In his conversation with Moneycontrol, Prashant Jain of 3P Investment Managers advocated caution. "Investors should tone down their expectations, as the risk-reward currently is not great," he said.

Talking about industrials, he said that some are overvalued at the moment. Just like how some consumer staple companies were trading at 40-60x PE earlier and then started underperforming, the same could happen to some industrials.

"Investors should not pick them unless they see sustained growth in the company," Jain said, adding that after a certain threshold, investors should not extrapolate continuous growth into returns.

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 making any investment decisions.