AK Prabhakar, the head of research at IDBI Capital, feels infrastructure, cement, automobiles, banks, insurance, healthcare, PSUs and real estate sectors would benefit the most from Budget 2021.
Finance Minister Nirmala Sitharaman, in her Budget speech on January 1, announced a host of measures to rebuild the economy, damaged by the Covid-19 pandemic. The Budget has laid greater emphasis on infrastructure and healthcare sectors. Further, the Budget also revealed the government’s intent to focus more on disinvestment and privatisation.
The finance minister proposed to divest two PSU banks and one general insurance company in FY22.
Prabhakar has rated the Union Budget 2020-21 as 8 out of 10. Excerpts:
Q: What is your view on the Union Budget 2021? Is it really a game-changer?
No negative news is the best positive news… no major tax changes is the major positive takeaway. If not a game-changer, the Union Budget 2021 is at least suggests a change towards growth and good governance. Overall, the Budget has met my expectations. I would rate it at 8/10.
Q: What are the announcements that, according to you, have been positive surprises?
Positive surprises include privatisation of two public sector banks (PSBs) and one insurance company, accommodation for higher fiscal deficit at 6.8 percent and a significant share of capital expenditure, scrapping policy for auto, and no changes in the direct taxes.
Q: Sectors that are expected to benefit the most from this Budget.
Infrastructure, Cement, Automobiles, Banks, Insurance, Healthcare, PSUs, and Real Estate would benefit the most.
Q: What should be one’s investment strategy post budget? What is your advice to retail investors?
We would recommend a stock-specific approach. We are cautiously positive on the market.
Q: What should be the portfolio allocation after the Budget?
Portfolio allocation could be to Cement, Insurance, Real Estate, Private banks, Automobiles (two-wheelers), Infrastructure, and select PSUs – with a focus on high-quality stocks.
Q: What are your expectations from RBI monetary policy scheduled to be held on February 5, especially after the Budget?
We are not expecting any change in RBI policy in its upcoming meet.
Q: Should one start focussing on the auto space after the budget, scrappage policy, and January sales data?
Yes, one should start looking at the auto sector with a preference for two-wheelers and commercial vehicle OEM and ancillary companies.
Q: Should one invest more in mid, and small caps instead of large-cap names post Budget?
Our preference is quality of the company and its growth opportunity rather than market-cap.
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