MC Interview | Rohit Agarwal of Kotak Mahindra Life bullish on 5 sectors after Budget 2022

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It is a good Budget, focusing on encouraging investments, startups and boost to capex, instead of consumption. It has met expectations as right capex is the biggest GDP multiplier. Borrowing is slightly on the higher side, which will need to be addressed. Otherwise, it may lead to a spike in yield as was seen earlier today. However, some of the revenue assumptions seem pretty conservative, which may provide some relief. Revenue receipt growth is assumed at just 6 percent which is significantly lower than the 27 percent growth projected last year.

Would you call it a growth-oriented budget through which the government did a fine balancing act?

Yes, it is a growth-oriented Budget. The government continues to focus on long-term growth drivers like infra, rather than short-term consumption support. Capex has moved from 12 percent of Budget spend in FY22 to 19 percent in FY23. It has done a fine balancing act by not getting populist and going for capex spends.

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Any announcement from the finance minister that made you surprised?

Digital assets are coming into the tax bracket. NFTs (non-fungible tokens) will now be charged 30 percent tax and an additional charge of 1 percent TDS. By getting this into tax coverage – the government has built an additional source of revenue as against the earlier budgets.

Have you spotted any negative announcements (with respect to equity market, FIIs, retail investors and so on) in the Budget speech?

There is no clear negative for the equity market, while the borrowing numbers look on the higher side. It seems that the government is conservative on the revenue assumptions.

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What are the sectors to bet on or that one must have in his portfolio now?

Given that it is clearly a growth-oriented Budget with focus on infrastructure and capex, I have a list of sectors that one can be optimistic about.

a) Capital goods sector since the maximum spend is likely to be there.
b) Financials sector which benefits from some rise in the interest rates as asset side will reprice faster versus the liabilities side.
c) Infrastructure sector including cement.
d) Building materials as houses etc will need paints, tiles, plywoods.
e) Chemicals sector which now has reduced customs duty on some raw materials and receives recognition from the government.

Do you think this Budget has put a clear roadmap for India to achieve $5 trillion target by 2024-25?

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Yes, the government is targeting 60 lakh jobs in the next five years, and building blocks for the GDP. Around 68 percent of defence capital allocation to local manufacturers, launch of CBDC (Central Bank Digital Currency), focus on environmental issues, climate change, developing logistics, digital banks and futuristic policies like battery swapping or inter-operability standards will all be the building blocks for India to achieve the $5-trillion target.

Are you happy with the government's divestment programme set in the Budget 2022?

Yes, the number at Rs 65,000 crore looks realistic and achievable.

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