ETMarkets Smart Talk: Telecom, auto among 4 sectors that may lead next leg of rally on D-St: Gurmeet Singh Chawla

Anything in the Budget which stood out? Any announcement(s) which came as a surprise, and you think is a step in the right direction?
Finance Minister Nirmala Sitharaman presented a surprise-free Budget for FY23-24, aimed at driving economic growth in a global scenario, where a recession looms for most of the large economies.

Keeping in view the increasing levels of inflation carried by constant hikes in repo rate, the transition in tax slabs has certainly provided relief to taxpayers.

FM used all the right buzzwords to revive investor confidence along with high government capex allocation of Rs 10 lakh crore, sops for small businesses through Rs 9,000 crore corpus for a revamped Credit Guarantee Scheme, revamping income tax slabs and making it simpler for individuals as well as maintaining fiscal deficit prudence.

For SME businesses, which are seen as a lifeline for the economy and job creation, it is being seen as a big booster.

With the majority of the earnings already declared how do you sum up the December quarter earnings season?
As of February 3, 2023, the results of 963 companies have been declared. The sales grew by 2.6% QoQ to Rs 21.52 lakh crores in December 2022 from Rs 20.97 lakh crore in September 2022 and PAT grew by 16.95% QoQ, amounting to Rs 1.65 lakh crore in December 2022.

Sectors that are likely to lead the next leg of the rally on D-Street post Budget?
One of the sectors that can possibly offer high returns in the coming future is probably the telecom sector.Telecom:
The proposal to set up 100 labs for the development of applications using 5G services in areas including smart classrooms, healthcare and smart cities is positive for top two telecom companies like Jio and . This can elevate the firm investor trust.

Auto Sector:
Furthermore, the auto industry also has a reason to celebrate since the budget has removed custom duty on capital goods imported for the manufacturing of lithium-ion batteries used in electric vehicles (EVs). The move is to reduce the cost of EVs in the country.

An increase in spending on infrastructure, the setting up of 50 new airports and heliports, creation of 100 transport infrastructure projects are welcome moves, in addition to the central support for replacing old vehicles. All of these should drive consumption and overall demand for vehicles.

Tourism:
There is a huge thrust on the tourism sector in the budget. 50 domestic destinations will be selected and uplifted. Domestic tourism will be promoted as an alternative to international tourism.

Consumer Discretionary:
Even the consumer discretionary sector should benefit from a higher disposable income from the tax cuts.

What are you telling your clients to do after the Budget 2023?
The Budget is based on 7 key priorities. In our view, the budget is growth-development-infrastructure oriented.

The focus on AI will accelerate digitization of the Indian economy, and the Budget provided much-needed relief to the MSME sector with various fund allocation schemes.

Government’s efforts to develop skills for youth will benefit the overall progress of India. With a ten-fold increase in the outlay for railroads along with a boost to infra projects, investors can be bullish on infrastructure stocks. Even the telecom segment can be something worth focusing upon.

Now with earnings done, Budget delivered – what will drive markets in the near-medium term? What should investors watch out for?
If you look at the economic survey and then the budget, the outlook is very positive to ensure that India delivers over 6% Real GDP growth over the coming year.

Short term, markets are in a tussle between the FPIs who are shorting the markets, and DIIs are the ones buying the dip.

There would be some reallocation of India holdings for global funds considering developments around the Adani group.

All in all, the GDP growth, consumer market growth, and the export opportunity presented will continue to drive the market higher in the long term.

What is your take on the infra as a sector especially after the Rs 10L Cr. budget outlay planned for this space by the govt?
As per the Budget, capital investment outlay is being increased steeply for the third year in a row by 33% to Rs 10 lakh crore ($122 bn), which would be 3.3% of GDP. This will be almost three times the outlay in 2019-20.

This will not just crowd in private investments, enhancing growth potential and job creation, but also provide a cushion against global headwinds.

This is being complemented with the continuation of the 50-year interest-free loan to state governments for one more year to spur investment in infrastructure and to incentivize them for complementary policy actions, with a significantly enhanced outlay of Rs 1.3 lakh crore ($16 billion).

To enhance opportunities for private investment in infrastructure – the introduction of the Infrastructure Finance Secretariat can assist in boosting private investments in infra including railways, roads, urban infrastructure, and power, which are predominantly dependent on public resources.

Furthermore, the FM has also proposed an outlay for the revival of the aviation sector along with the advancement of India’s logistics for improving urban and rural development connectivity.

Infrastructure and allied sectors should benefit from the higher budgetary allocation.

(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. These do not represent the views of Economic Times)