Market scales fresh record high: What experts are betting on after budget
The government has targeted a fiscal deficit of 5.1 percent of the GDP for FY25, significantly surprising market expectations of 5.3-5.5 percent. lower number theoretically means the economy is doing better, says Ajay Srivastava, CEO of Dimensions Corporate Finance Services.
February 02, 2024 / 13:20 IST
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After giving muted reaction to the Interim Budget presented by Finance Minister Nirmala Sitharaman on February 1, the market rallied 2 percent on February 2 with the Nifty hitting a fresh all-time high led by buying across the sectors and heavyweights.
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Shankar Sharma, Market Expert | It is a stock market-driven government, and the Interim Budget 2024 was simply a continuation of the presently prevalent policies. The market has not reacted extensively towards the election budget because the important announcements had been factored in. I do not think that the market has factored in any slippages on the capex front, especially because the fiscal deficit number is quite aggressive. Capex has to be reduced to meet the fiscal deficit target of 4.5 percent in FY26. Capex cannot continue at this breakneck speed. And when capex spend is dialled down in the upcoming years, largecaps will take the biggest hit. That's why I say that India remains a smallcap market.
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Madhusudan Kela, Co-Founder, MK Ventures | The government’s intent to curtail fiscal deficit this year and also give two-year guidance that it will be 4.5 percent is very heartening from not just the market but the country's perspective. The move is positive for the market as it will lead to a reasonable amount of borrowing and liquidity being left for banks and private sector companies to look for their capital requirements.
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Prashant Jain of 3P Investment Managers | Prashant Jain believes that given the scale at which the government is planning the solar rooftop plan, the utility space will become crowded. I doubt if any good investment opportunities will arise in that (utilities) space. However, see some good investment options in the utilities supply side. Investors should tone down their expectations, as the risk-reward currently is not great. Just like how some consumer staple companies were trading at 40-60x PE earlier and then started underperforming, the same could happen to some industrials. Investors should not pick them unless they see sustained growth in the company and after a certain threshold, investors should not extrapolate continuous growth into returns.
Sandeep Tandon, Founder of the Quant Group | The traditional themes will continue. On the stocks or themes to bet on, the main hunting ground for the decade belongs to value as a thesis, which has potential. We are very constructive on PSUs and see deep value, but only larger names and not smaller names. We see value in cement too, and even in stocks linked to precious metals, base metals, ferrous and non-ferrous. So cement, PSUs, and to some extent, construction, and EPC companies also look good. Capital goods might peak out in the near term, but looking good from the long-term perspective. So, I will remain focussed on energy, power, PSUs, metal and cement as a theme. These are the larger themes which I would like to stick to.
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Ajay Srivastava, CEO of Dimensions Corporate Finance Services | The government has targeted a fiscal deficit of 5.1 percent of the GDP for FY25, significantly surprising market expectations of 5.3-5.5 percent. A fiscal deficit is the amount by which the total expenses of the government exceed its total earnings. A lower number theoretically means the economy is doing better. The capex and railway stocks have entered the overbought zone, after their relentless rally over the past two years. Going ahead, he believes hotels, airlines and stocks catering to premium customers will continue to do well. The government has become prudent and so should investors.
