By Nupur Acharya and John XavierIndian wealth and alternative investment managers expect the next federal budget to propose measures that will improve consumption and bolster infrastructure to revive economic growth.Newly appointed Finance Minister Nirmala Sitharaman will present her first budget on Friday.
Growth slowed to a five-year low of 5.8 per cent in the first three months of 2019, amid a liquidity crunch at non-banking financial companies.
Thats put pressure on recently reelected Prime Minister Narendra Modi to deliver on a stimulus plan.Heres a roundup of views from fund managers on current opportunities in the market:Nalin Moniz, chief investment officer, alternative equity, Edelweiss Asset Management Ltd.Liquidity conditions are slowly normalizing; the cash squeeze should normalize in 1-2 quartersExpect to see a broad-based revival in earnings in the latter half of FY20Sees opportunities in consumption, exports and financial services sectors on a 5-year horizonOver the longer term, both consumer goods and discretionary consumption are expected to boom as the Indian economy grows from $2.7 trillion toward $5 trillionNiftys current valuations are incomparable to the past, as indexs composition has shifted from manufacturing toward financialsVijay Krishna Kumar, head of liquid alternative investment, IDFC Asset Management Co.The budget will be another non-event accounting exerciseIts difficult to get excited without clarity on the Bimal Jalan committee outcome on transfer of the central banks surplus funds to the governmentWaiting to see a concerted policy response to arrest the non-bank financial crisis, which has all the drama of a slow moving train wreck.
Without something concrete, its hard to build a bull case on the consumer segmentThe deficient monsoon is a concern, as the rural economy and wages were already stressedWe are long vega going into the budget announcement.Umang Papneja, senior managing partner, IIFL Wealth Management Co.The liquidity squeeze due to the credit crisis has created an investment opportunityThe flight to quality trend since September is likely to continue for some timeSpotting some good ideas amid the turmoil in the real estate sector; introduction of a regulator may help drive consolidation; stronger players are likely to get cheaper creditIts a divergent time for equities, as only a few stocks are driving the indexes higher; its time to gradually start investing in select mid-caps stocks after a sharp correction