Poonam Tandon, the chief investment officer (CIO) at IndiaFirst Life, believes the thrust of the government in the upcoming Budget 2021 is likely to be more inclined towards reviving growth and sustaining the demand recovery process.
PM Narendra Modi-led NDA government will present Union Budget 2021 on February 1, which will be the first Budget after the COVID-19 crisis.
Tandon, who has over 26 years of experience in the financial services sector, said the chaos in 2020 had re-iterated some valuable investment lessons that investors should learn for 2021 including avoid timing the market movement.
Q: What are those key sectors to be in focus in the Budget?
The government and RBI have reinforced investor confidence with their continuous policy responses to contain the impact of the pandemic on the economy. We believe the thrust of the government will be more inclined towards reviving growth and sustaining the demand recovery process. We expect the government to focus on ramping up infrastructure and manufacturing activity with more emphasis on self-reliance and are positive on the economy facing sectors. Additionally, we expect measures to be taken to create more jobs.
Q: What are your broad expectations from the third quarter earnings season that started off this week? Will Q3 results give a proper indication about the FY22 earnings or should we wait for Q4 numbers?
We expect Q3 earnings momentum to continue with recovery likely to be broad-based with mostly all sectors likely to report profit growth. We believe the coming quarter is also critical to ascertain whether this growth recovery is sustainable and not led by pent-up demand.
Q: Should investors prepare for a major correction of around 10 percent from current levels in 2021? Also, will the market give a double-digit return in the current year?
We should always remember that market volatility is part of the investing journey. With a long term view, we believe the focus in 2021 will be more on stock picking. Investors will need to focus on the fundamentals of companies and sectors for results and asset allocation will also gain importance.
Q: What are the five key mistakes investors should not repeat in the year 2021 after great learning from 2020?
The chaos in 2020 has re-iterated some valuable investment lessons that investors should learn – 1) Do not panic sell but take a long term view; 2) Systematic and regular investing is important as a steady approach yields greater return in the long run; 3) Portfolio diversification and allocation is critical when uncertainty is high; 4) Avoid timing the market movement, and lastly 5) Buy when the valuations are low and uncertainty is high! These will definitely earn returns in the long run.
Q: After the run-up across sectors in the last nine months or from March lows, do you find value in any sector/s that can give a multi-bagger return by the end of 2021 or in a couple of years?
With the growth outlook expected to improve in 2021, we believe there are companies in the broader indices, which have significant operating and financial leverage that can outperform the large caps. We like companies in the infrastructure/capital goods/PSUs given the inexpensive valuations. We also continue to be bullish on IT and Pharma for the long term.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.