Daily Voice: 100% FDI in insurance unlikely to significantly change competitive landscape, says Manish Gunwani of Bandhan AMC

Manish Gunwani is the Head – Equities at Bandhan AMC

According to Manish Gunwani of Bandhan AMC, the increase in FDI limit to 100% (from 74% earlier) for insurance sector is unlikely to significantly change competitive landscape. Most of the incumbents have very strong brand and distribution, he reasoned.

He believes the budget does provide a fairly strong boost to urban consumption via tax cuts. Also, "since fiscal deficit is lower than expected it may help reduce interest rates which will further aid urban consumption," said Manish with over 27 years of experience in equity research as well as fund management. He is the Head – Equities at Bandhan AMC.

Will you give a 10/10 for the budget, and why?

I would give it 8/10 as while significant stimulus to middle-class, reasonable growth in infrastructure spending and broadly conservative estimates are big positives, the overall expenditure growth is limited – it may need to be combined with other steps like monetary easing to help growth.

Do you think the budget has done enough to boost urban consumption, which was a major concern for the equity markets?

Yes the budget does provide a fairly strong boost to urban consumption via tax cuts. Also since fiscal deficit is lower than expected it may help reduce interest rates which will further aid urban consumption.

Do you foresee a revival in private capex, especially after significant personal tax relief?

The budget via boosting consumption should help in increasing capacity utilisation which should in turn incentivise private capex. However, private capex is subject to many other moving parts as well including global growth, interest rates etc.

What are the three biggest positives and three biggest negatives that have emerged from the Union Budget?

Positives

1) Tax cuts for helping consumption

2) Reasonable growth in infrastructure spending

3) Broadly conservative estimates

Negatives

1) Overall expenditure growth limited

2) Strategic divestment stance not clear

3) Limited steps to accelerate labour intensive manufacturing

Do you think 100% FDI in insurance will significantly change the competitive landscape?

It is unlikely as most of the incumbents have very strong brand and distribution.

What is the main reason the government hasn't focused much on capex in the budget?

If compared to revised estimates the numbers are reasonable. The growth multiplier may be better with consumption stimulus.

Which sectors would you consider investing in after the budget?

Overall we feel structurally segments where India’s white collar workforce is employed are globally competitive and this will aid urban, affluent consumption – the budget has in general aided these segments.