Moneycontrol Pro Panorama | Budget fever grips Indian equities

Budget 2022

Dear Reader,

The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of.

Equity markets began the week on a positive note with an eye on the Union Budget. The Nifty 50 index is up 1.4 percent in Monday’s trade with all major sector indices in the green, at the time of writing this newsletter. Trading in Asia is thin on the eve of Lunar New Year. Tensions on the Russia-Ukraine border are building up. Brent crude oil prices are at $90 a barrel. Central banks in Australia, England and Europe (ECB) are set to consider interest rate hikes or policy tightening this week.

Yet, all eyes in India are firmly placed on the Union Budget, and rightly so. Amid signs of moderation in economic activity and slowdown in the rural economy, the Budget is expected to provide impetus to growth, employment and investment.

Encouragingly, the government seems to have managed its finances well. This should help the government funnel more resources to flagship schemes. Data till November 2021 (8M FY22) show decent revenue trends and fiscal deficit at 46.2 percent of the full-year target.

“The key to the good performance over the first 8 months of this fiscal year was the strength of revenue (particularly tax revenue) receipts, which reached 75.9 percent of the full-year target within 8 months, while total expenditure reached only 59.6 percent of the full-year target,” points out ICICI Securities.

Still, investors should remain cautious. The government has much to deliver, especially on stake sales and privatisation. Taxation has to be simplified. Capital expenditure needs more focus and government support.

Also, one should take note of the changed global backdrop. “The global scenario has changed dramatically with global central banks turning extra hawkish now from super dovish the time Budget was presented last year. Inflation is stubborn and not transitory and rates are headed north. So, risky asset classes are bound to feel the pinch, irrespective of a dream Budget, writes Madhuchanda Dey in this piece. Do read.

You can track the latest updates, analysis, expert opinion and industry views on the Union Budget, including the Economic Survey, at Moneycontrol.com. Subscribers will get exclusive access to insights and investment views on the Budget presented in Moneycontrol Pro.

Payment solutions provider AGS Transact Technologies made a tepid debut on the stock exchanges. Corporate earnings season is in full swing and our research team has analysed results of Larsen & Toubro, Dr Reddy’s Laboratories and NTPC, among others. Links to the stories are given below.

In another corner of the market, investors are giving a mixed reaction to Apollo Hospitals Enterprise’s plan to list and sell its pharmacy products on Amazon.in. The stock is down 1 percent at noon amid upbeat equity markets. The tie-up vastly improves Apollo Pharmacies’ reach and cushions it from cash burn in building a digital channel to some extent. Apollo is targeting $1 billion of sales from the Amazon tie-up over the next three years.

But some fear ‘cannibalisation’ of the Apollo’s existing business. Customers may route their orders from Amazon, undermining Apollo’s digital platform. The non-exclusive and market place nature of Amazon exposes Apollo’s business to competition and discounting. Also, many on the Street were expecting a strategic financial investment similar to the recent Google-Bharti Airtel deal. Even so, these are early days and one should see how the tie-up with Amazon plays out for Apollo.

Investing insights from our research team

Kotak Mahindra Bank Q3 – Why a must-have in the portfolio

IndusInd Bank Q3 – Why the stock should rerate

Dr Reddy’s: Supported by traction in limited competition products

Larsen & Toubro: Strong pipeline, stable earnings to support stock returns

NTPC: Value unlocking could drive stock higher

Pidilite Industries Q3: Margin woes continue

Laurus Labs: Diversification away from ARVs on track

Marico: Market share gains, penetration-led strategy continue

What else are we reading?

Budget Chart of the Day | The state of the economy in 10 charts

Does the budget really matter for the market?

For efficient Budget making, follow US open system

Budget Chart of the Day: Top gainers, losers on Budget Day say a lot

The Eastern Window | Why the Budget should address Aatmanirbhar pitfalls

Diluted eligibility criteria erode listed firms' share in road projects

Will Unity SFB be able to unite PMC Bank depositors?

World’s largest wealth fund warns ‘permanent’ inflation will hit returns (republished from the FT)

Technical picks: HDFC Bank, Lemon Tree Hotels, Bata and BPCL (These are published every trading day before markets open and can be read on the app)

R Sree Ram
Moneycontrol Pro