Global investors are bullish on India, and with the intent to capitalize this opportunity govt could raise funds through overseas bonds.
Growth in the stock market will depend on the execution and delivery of budget announcements
Indian share markets are witnessing volatility ahead of Union Budget 2021. BSE Sensex and NSE Nifty 50 rose to record highs of 50,184 and 14,753 points, respectively, last week. Since then Sensex has tumbled 1,290 points or 2.56 per cent, while the NSE’s Nifty 50 index lost 382 points. BSE market-capitalisation has also fallen to Rs 195 lakh crore from an all-time high of Rs 199 lakh crore hit yesterday. Vinit Bolinjkar, Head of Research, Ventura Securities Ltd, sees a limited upside in Indian share market from the current levels. Further, the execution of budget announcements will sway the market sentiment. In an interview with Surbhi Jain of Financial Express Online, he also talked about a few sectors that will drive earnings in the coming days.
Where do you see BSE Sensex, Nifty 50 on Budget day? Which sectors are likely to remain in focus?
After a strong run in the past several months, we see a limited upside for Sensex and Nifty from the current level. Both are expected to remain range-bound on budget day. The Government is likely to focus on infrastructure, agriculture and manufacturing to boost core economic performance in FY22. Further growth in the stock market will depend on the execution and delivery of budget announcements.
With new IPOs hitting the markets, what would be your advice to investors?
Quality and pricing are to be kept into consideration. We will see optimization in the IPO market. Only quality businesses are expected to sustain their valuation and do well in future. One has to look at the promoters/board of directors/stakeholders, quality of the business, business outlook and valuation before investing in any IPO.
What would be an appropriate strategy for Nifty Bank traders?
The investors should hedge the long futures. We are bullish on the Indian market but global sentiments could create volatility. To mitigate it we would recommend hedging the long futures.
What do you make of call-put option data ahead of Union Budget 2021?
Shooting VIX and our proprietary tools suggest that we have initiated a short term downtrend at least till expiry.
Which three sectors do you think will drive earnings in near-medium term and why?
As mentioned earlier, infrastructure, agriculture and manufacturing will remain in focus. Global investors are bullish on India, and with the intent to capitalize this opportunity govt could raise funds through overseas bonds. Infrastructure and capital goods companies could be the key beneficiaries. PLI scheme for mobile & allied equipment, API and medical equipment is likely to be extended to other manufacturing goods such as consumer durables, capital goods, etc and export-focused companies could be the key beneficiaries. The government may focus on the entire agricultural value chain to improve productivity and reduce post-harvest losses while ensuring adequate realisation for the farmers. Therefore the focus would be more on the roll-out of DBT for fertilizer subsidy.
What are your overweight and underweight sectors/stocks in the run-up to the Union Budget 2021?
We would recommend BUY on stocks in infrastructure, fertilizers, capital goods and consumer durables. Larsen & Toubro Ltd and RITES are our bets in infrastructure space, while Siemens, Cummins India and AIA Engineering are well-positioned in the capital goods segment.