TCS, ICICI Bank, other must-have stocks: Time to rejig investment portfolio post Budget 2021? INTERVIEW

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February 11, 2021 12:28 PM

Investment advisor Sandip Sabharwal tells that the biggest driver of the markets now is easy liquidity which needs to be monitored.

Union Budget 2021, TCS, ICICI Bank, PSU banksSandip Sabharwal also talks about the key sectors where investors can look for opportunities

Union Budget 2021 largely focussed on the infrastructure sector, and no negative announcements fueled the rally Indian stock market for the six consecutive days. Also, key announcements related to the banking sector pushed the Nifty Bank index nearly 18 per cent higher after the Budget. In comparison, the Nifty 50 index jumped nearly 11 per cent so far in February. Investment advisor Sandip Sabharwal tells Surbhi Jain of Financial Express Online that the biggest driver of the markets now is easy liquidity which needs to be monitored. Sandip Sabharwal also talks about the key sectors where investors can look for opportunities. Even as Budget 2021 is over now, Sabharwal lists key drivers and risk tiggers in the markets going ahead. Here are the edited excerpts.

1. How would you rate Union Budget 2021 and why?

The Union Budget had no significant negatives or positives. It was a balanced budget and the good part was that new tax increases were avoided. There has been an increase in allocation to capital expenditure; however overall expenditure is projected to grow just 1%, which actually makes it a contractionary budget with the entire onus on revival on private consumption and investments. With increasing commodity prices and renewed inflationary pressures, we could see private consumption come under pressure somewhat although the investment cycle should see some revival.

2. Which sectors could benefit and lose from Budget proposals?

There has been some focussed targeting of infrastructure investments so those companies should benefit. If the government is able to carry through with its proposals for strategic disinvestments then we could see a re-rating of the PSU Basket. With the water projects being in focus we could see some pipe companies do well. There were no clear cut losers due to the budget proposals.

3. Is it a time to rejig the investment portfolio post Budget presentation? What should be the investment strategy now?

Domestic cyclicals could do better going forward as they are cheaper on valuations as well as could see greater growth traction. Many recovery plays of companies that were impacted most due to the Covid related lockdowns could come back sharply and do well. The Real Estate sector is seeing some renewed comeback after years of low growth and presents investment opportunities. Highly valued consumer stocks could underperform for some time.

4. Going ahead, what factors would drive the stock markets and what are the key risks?

Easy liquidity is the biggest driver of the markets today and to that extent that needs to be carefully monitored. Return to normalcy trades will do well and for that we need to see the effectiveness of Vaccines and hope that there is no resurgence of Covid. The biggest risk is commodity price driven inflation which could take interest rates higher and impact market valuations. The other big risk is the large borrowing program of the government where if there is an economic revival and credit growth improves then government borrowings can crowd out private investments.

5. If someone is looking to build a portfolio of 5 stocks for the next 3 years, then according to you which are the must-have stocks in that portfolio?

The split can be across sectors. A large back could be ICICI Bank. With a focus on infrastructure, Larsen and Toubro (L&T) could do well. In the Cement sector, the largest player UltraTech Cement is good. In pharma, Sun Pharmaceuticals Ltd is well placed in the growth valuation paradigm and in Technology, Tata Consultancy Services (TCS) should do well.

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