The next big thing which we are looking at in the Budget is the fiscal deficit number, Shailendra Kumar, Chief Investment Officer at Narnolia Financial Advisor said in a special podcast with Moneycontrol.
Indian market closed the year 2019 with double-digit gains, and the big market-moving event would be the Union Budget 2020 in February which could further boost market sentiment, suggest experts.
“We could see some tweak in personal tax slabs in Budget. But, for me, I am looking at certainty in fiscal policy. One thing which hurts business is a change in rates,” Shailendra Kumar, Chief Investment Officer at Narnolia Financial Advisor said in a special podcast with Moneycontrol.
“A businessman does not like low rates or high rates – he likes certainty in the rate structure to help him in capital budgeting. The next big thing which we are looking at in the Budget is the fiscal deficit number,” he said.
Kumar further added the bullish thesis might get challenged if the fiscal deficit number becomes too high. The way tax collections are going, there is no visible sight of improvement.
If the fiscal deficit becomes too high, the government would have to do market borrowing and that will crowd out private companies from the bond market and reduce liquidity.
What should investors do in 2020?
Investors should look at making their portfolio in two-parts – one is the ‘core portfolio’ and the other is the ‘Tactical portfolio’. The core portfolio includes stocks that are there for the long run while the Tactical portfolio is more focused on a 1-2 year performance.
A large part of the money should be in the core portfolio in which you buy only those companies that are for the long term with competitive advantage and moat. It should be a consistent performer, suggest Kumar.
The year 2020 is a time when investors should rejig their tactical portfolio which is approximately 20-30 percent of your total portfolio and invest in stocks that are displaying signs of growth.
“Smallcap stocks are unlikely to fly immediately till the time economy doesn’t show signs of improvement but price-wise the equation is favourable and the moment the economy starts showing signs of growth, small-caps will outperform,” explains Kumar.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 taking any investment decisions.
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