Ashutosh Tiwari, who has over 10 years of experience in capital markets under his belt, is of the view that Budget 2021 would focus on investments that create jobs and, therefore, infrastructure and construction would be key areas.
Tiwari who is a Head of Research at Equirus Securities said that infrastructure, real estate, construction and railways are some of the sectors which will be in focus in the upcoming Budget 2021, in an interview with Moneycontrol’s Kshitij Anand.
Edited excerpts:
Q) It was a volatile and unpredictable year which changed how most of us live, socialize, and not to forget invest. What is your outlook for the year 2021?
A) COVID cases are going down in India and we are seeing normalization of life in most of the smaller cities in India. Normalization in movie theatres and other crowded places can, however, take more time and would also depend on vaccination.
We expect a strong economic recovery in the next few years as: 1) over the last few months we have seen a decent pick up in real estate sales if it sustains, construction activities can pick up, 2) NHAI awarding of road projects has been good so far this year, which should reflect in better execution from the next year, 3) PLI schemes can help revival in CAPEX investments. A pick up in manufacturing also augurs well for job creation.
Q) The next big event which would drive the sentiment is Budget 2021 and FM has already given a teaser that it would be a vibrant one. What are your expectations from the Budget and policy measures that could cheer markets?
A) We believe that Budget 2021 would focus on investments that create jobs and therefore infrastructure and construction would be key areas. More granular details of PLI schemes to spur manufacturing might also be announced in the Budget.
Q) Which sectors are likely to remain in focus ahead of the Budget?A) Infrastructure, Real Estate, Construction, and Railways are some of the sectors which will be in focus in the upcoming Budget 2021.
Q) COVID is not over yet but vaccine news is comforting. The uncertainty is likely to linger on in the coming year as well. What are the big risks for equity markets that investors should keep an eye out for?
A) Liquidity is one of the key reasons behind the rally in markets. If we see any breaks over there it would be a cause for worry. Investors need to watch USD closely as well as the depreciation of which is also supporting markets.
Q) FIIs have been generous when it comes to flows in 2020. Will the momentum continue in the coming year as well? Data suggests that FIIs have invested more than $20 billion in Indian equities in CY20 while DIIs sold more than $3 billion led by redemptions in mutual funds.
A) USD depreciation and high liquidity is one of the key reasons behind FII flows in India. Recent discretionary consumption trends in the domestic market are also encouraging and pointing towards normalizing consumption trends in India.
These along with expected pick up in infrastructure and construction are positive signs for economy recovery next year. We expect FII flows to remain healthy as long as don’t see big reversal in USD, however quantum of flows may taper off.
Q) Primary markets hogged the limelight in the year 2020 with more than 16-17 mainboard issues collectively raising more than Rs 30,000 cr. What do you forsee for the year 2021, and big issue to track?
A) We expect momentum in primary markets to continue as private as well as public companies will take advantage of higher multiples to raise money.
Q) What is your advise for investors for the year 2021? Things to keep in mind while investing/trading especially for the first-time investors?
A) Invest in quality companies. In the frenzy and high liquidity scenario, even poor companies go up sharply but when the tap closes they see a steep fall as well. Always invest in companies with better cash flows and low financial leverage.
Q) Which sectors are likely to hog limelight in the year 2021?
A) We expect the recovery in economy and investment next year and hence prefer Industrial, Construction, Infra and Consumer Discretionary stocks.
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