What were its major hits and misses?
The resolve to improve the income levels of rural, farmers and unorganised workers’ pension were positive whereas misses seem to be on providing some tax breaks to middle class, in general.
Rs 75,000 crore package has been allocated for PM Kisan Samman Nidhi scheme. Given this, what are the key risks to the fiscal deficit?
It will have an impact of 37 basis points (bps) on fiscal deficit in FY20. However, this dose of money flow in the hands of farming community with less than 2 hectares of cultivable land will boost the consumption demand and provide buoyancy to the economy.
What's your broader outlook for the Indian equities? Top triggers?
We have a cautious outlook on markets
given that Lok Sabha elections are around the corner. Elections are the biggest near-term trigger. A strong government at the centre can re-rate the markets
from current levels; however, any weak alliance can result in range-bound markets.
DHFL's pain seems far from getting over. Zee Group is also mired in trouble. How do you see these developments?
Clearly, developments like DHFL or ZEE are negative for the markets. However, it is a transition period if the underlying business and assets are sound. These incidents will further increase the risk aversion and skew valuations in favor of companies with better track record of corporate governance.
Stocks/sectors you are bullish on and why?
We are positive on the consumption and financials space. We believe that the budget provisions will increase demand for the bottom end of pyramid in rural India and boost demand for staples, small electric appliances, apparel and two-wheelers. Among individual stocks, we are positive on Hindustan Unilever (HUL), ITC and Crompton Consumer in this segment. We also like Titan Company and Jubilant Foods in the urban consumption space. In the financials segment, we like HDFC Bank and ICICI Bank while Petronet LNG is the preferred pick in the Oil and Gas segment.
What's your view on mid and small-cap segment? What advise would you like to give to investors in this space? Top bets, if any.
Mid and smallcaps have seen meaningful value destruction in the past one year and are at a much better valuations now. However, we expect only selective recovery in mid and small caps. We like IDFC Bank and Crompton Consumer in the space.
Going forward, how do you see information technology (IT) and metal stocks perfoming? Key triggers/threats?
IT stocks have seen sharp outperformance in the past one year, but returns are likely to be more moderate in large caps such as Infosys and TCS. However, they can still outperform given stress in other sectors. We prefer Tech Mahindra and L&T Technology Services in the IT space. In the metal pack, Tata Steel looks promising at current price post sharp correction in the previous quarter. We expect steel prices to recover, which along with improved balance sheet will provide support to Tata Steel.