Daily Voice: Union Budget can be a game-changer if it delivers these bold reforms, says Invasset PMS' Anirudh Garg

Anirudh Garg is the Partner and Fund Manager at Invasset PMS

"A Union Budget can be a game-changer if it delivers bold reforms addressing structural challenges, spurring growth, and encouraging investments," said Anirudh Garg, Partner and Fund Manager at Invasset PMS, in an interview to Moneycontrol.

According to him, a well-balanced Budget aligned with India's growth vision could significantly boost market sentiment and long-term growth prospects.

On the fear of expected tariffs by Donald Trump who will be taking charge as US President effective January 20, he said, "any widespread tariffs can disrupt global trade and economic growth."

A tariff-centric policy risks creating uncertainty in markets and undermining global supply chains, which are already strained by geopolitical tensions and post-pandemic adjustments, according to Anirudh who has 17 years of research experience in the stock market.

Yes, internet platforms and AI-based companies are increasingly appealing for investment due to their transformative potential across industries. The digital economy's growth is being driven by rising internet penetration, cloud computing, and innovations in AI. AI-based firms in particular are revolutionizing fields like healthcare, finance, and automation, with scalable models that often provide high margins. As these technologies become more integral to businesses, they offer long-term growth opportunities. However, valuations in this space can be elevated, so careful stock selection and a focus on sustainable business models are critical.

While Donald Trump is not in office as of January 20, 2025, it’s important to recall that his economic policies previously included tariffs aimed at protecting domestic industries. If such measures were pursued in the future by policymakers with similar ideologies, they could focus on boosting American manufacturing and jobs. However, unexpected moves would likely depend on global economic conditions and domestic political priorities at the time.

Yes, widespread tariffs can disrupt global trade and economic growth. Protectionist measures often lead to retaliatory tariffs, higher costs for businesses, and reduced consumer spending. Economies with strong export dependencies could experience significant slowdowns. A tariff-centric policy risks creating uncertainty in markets and undermining global supply chains, which are already strained by geopolitical tensions and post-pandemic adjustments.

The Indian rupee's trajectory against the USD depends on several factors, including oil prices, the trade deficit, and global interest rate trends. If the US Federal Reserve continues a tight monetary policy, the dollar could remain strong, adding depreciation pressure on the rupee. However, India's resilient economic growth and robust forex reserves could limit excessive declines. A moderate depreciation scenario is more likely than a significant pullback.

A Union Budget can be a game-changer if it delivers bold reforms addressing structural challenges, spurring growth, and encouraging investments. Priorities like infrastructure spending, tax rationalization, and policies to attract FDI can create a lasting impact. That said, the actual economic outcome depends on effective implementation. A well-balanced Budget aligned with India's growth vision could significantly boost market sentiment and long-term growth prospects.

The likelihood of an RBI repo rate cut depends on inflation trends, domestic growth indicators, and global monetary policy. If inflation remains within the central bank's comfort zone and growth requires further support, a rate cut could be considered. However, with global monetary tightening and risks of imported inflation, the RBI may prefer to maintain a cautious stance, focusing on stability over immediate easing.