Even as the date for Union Budget 2018 nears, Porinju Veliyath says that investors should look at companies which have potential to grow faster than the economy to create long-term wealth. As Finance Minister Arun Jaitley looks to give a boost to infrastructure and railways, ace investor Porinju Veliyath sees opportunity in stocks like Titagarh Wagons and Texmaco Rail & Engineering.
“In the infra sector, if you look at the government spending and the upcoming projects, the larger projects and government’s vision — the railway stocks have not moved up much. Even Titagarh Wagons has moved a little — 30-40%. Texmaco is almost at the same price. I am holding both the stocks and they are not big performers but I feel there can be a game changing kind of development for these companies going forward,” Porinju Veliyath told ET Now.
Sharing why he’s bullish in the railway sector, Porinju Veliyath said, “Looking at the big picture, the way government is planning to transform the railways, it is a huge task. It is a very large organisation and we need to upgrade and we need to spend huge money on railways because looking at our demography and the way we can develop it for the economic growth, if railways and the coastal seaways are properly managed, that can make our Indian economy grow higher. That is the kind of opportunities we are sitting on. This needs a large amount of capital outlay and the biggest benefit India is accruing from the recent reforms.”
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Even as the date for Union Budget 2018 nears and amid talks that Finance Minister Arun Jaitley will look to tweak rules of capital gains tax, Porinju Veliyath says that there’s no rationale to believe that imposition of long-term capital gains will lead to a stock market correction.
“I strongly believe the course of Indian equity investing in the markets will not change at all. If some change, says 10% tax is imposed on long-term capital gains, nobody will stop buying equity for that matter and nor will there be any crash in the market. There may be some effect for next 48 or 72 hours and volatility, but otherwise the market will not change its course of direction,” Porinju Veliyath told ET Now.
A few market voices had earlier pointed out that reintroduction of LTCG by Finance Minister Arun Jalitley in the Union Budget 2018 could lead to a stock market correction. “ The market also hopes that the LTCG on equities is not re-introduced. Tax free LTCG has been a key driver for investments in equities. However, an increase in the time limit for LTCG from 1 year to 3 years looks possible to foster a longer term approach to equities,” Angel Broking said in a recent note.