Nivesh Mitr spoke to fund houses about their views on the Budget 2019. Here’s what they had to say –
While the budget maintains a balanced approach between prudence and populism, the challenges regarding economic growth have not been fully acknowledged or addressed to.
From an investor’s perspective, equity funds with core exposure to large caps and prudent risk-taking in mid/small cap space may be well positioned to capture the opportunities presented by prevailing valuations in the market and expected earnings growth.
Continued focus on fiscal prudence and benign inflation augur well for the Indian bond market. In this backdrop, we expect two rate cuts by RBI. However, this will be contingent upon normal monsoons and external sector development.
From an investor’s perspective, we continue to remain positive on selective corporate bond funds and accrual strategies.
The first budget of the new government has raised expectations of the fiscal boost as economy growth has slowed. We remain hopeful that the government will provide some boost to the housing sector through relation or sops as the revival can not only drive broader economic revival but support job creation as well.
The performance of the Indian market over the next few months would depend on changes in the market’s view on earnings, macroeconomic situation and politics. We expect economic recovery on the back of MSP hikes, rural wage growth and resolution of GST issues. The likelihood of normal monsoon should support rural recovery. For now, the market has high confidence about high-teens earnings growth for the Indian market in FY2020. India’s macro story is at risk if trade tensions were to escalate.
With our expectation of increased volatility and earnings recovery, we feel stock picking will be more important in this challenging environment; hence we continue to prefer strong and able managements with earnings visibility.
The re-iteration that NBFCs are a cogwheel of the indian economy and incentivising PSBs to buy assetes from NBFCs will ease the current credit environment which is positive for investors in debt mutual funds. Overall, the budget lays out a good broad road map for the next 5 years and communicates a macro intent which supports growth with fiscal prudence.