By Andrew Holland
The continued focus on infrastructure capex by the government, along with the positive surprise on personal tax rates to strengthen consumption, will accelerate the country’s economic growth in the future. With more funds being allocated to defence, railways and affordable housing schemes, private capex will also get an impetus amid global headwinds.
The Budget’s focus on supporting the domestic economy will clearly boost our growth as well as create a positive image for the country among foreign investors, given the current concerns around global headline events. Moreover, the major shake-up in income tax will increase spending power and contribute to economic growth.
Global investors are focusing on emerging markets and India is on their radar. This Budget will ensure India is back on the investment map for foreign portfolio investors. It may happen in the second half of calendar year 2023, when the earnings upgrades start to happen. However, market valuation, which seems high right now, could be a roadblock for many investors in the short term. On the other hand, what Indian investors will take note of is that the Budget was not so populist, especially considering the many state elections lined up this year as well as the upcoming general elections early next year.
So, all in all, investors are welcoming the domestic-led growth proposal and liking the continuity of previous Budgets with the focus on bringing down the fiscal deficit.
We believe that the Budget’s clear focus is on companies that derive a bulk of their business from India and will benefit from the consumption boom, hotels, services and electronics. Other themes in the investment list are companies that will benefit from a higher capex. So, defence, electronics, railways and infrastructure-related stocks are on our radar.
Author is CEO, Avendus Capital. Views are personal.
