MC Interview | Government may increase infrastructure spending in Budget 2022 to revive economic growth, says Ajit Mishra of Religare Broking

Market Outlook
Ajit Mishra

Ajit Mishra

If one is in the 25-30 age bracket, Ajit Mishra, VP Research at Religare Broking advises that equities should remain the large chunk of the investment and invest the rest in the other asset classes.

On the Union Budget 2022, “given the tight fiscal space and delay in achieving disinvestment targets, we do not expect any big bang populist measures from the government,” says Mishra who has over 17 years of experience in equity market research.

After more than 10 percent correction from record highs, is it the right time for investors, who missed the bus, to pick quality stocks and do you still expect some more correction?

Markets may see further slide after the phenomenal run and it would be healthy as we’ve not seen any meaningful correction in the last two years. Several states have already announced restrictions citing the fear of the third wave of COVID which may dent the sentiment. At the same time, the move of liquidity tightening by the major economies may also add to the pressure.

In line with the benchmark, all the sectors, barring IT, are feeling the heat and have witnessed decent correction in the last two months. We feel investors should maintain the “bottom-up” approach and start accumulating quality stocks in a staggered manner.

What are the stocks/sectors that look attractive for bargain hunting after recent significant correction?

The banking pack, mainly the private sector banks, certainly fall in that category. We believe large private sector banks are better placed and would continue to gain market share on the back of decent asset quality, high provisions capability and a strong balance sheet.

The primary market ended the year 2021 that saw 65 public issues worth Rs 1.31 lakh crore (the record fund raising). How do you sum the year for IPO market and do you expect similar worth of fund raising via IPOs in 2022? Can you name the IPOs (with likely issue size) that are expected to be launched in 2022?

The primary market usually moves in tandem with the secondary market and we saw a similar trend in 2021. Businesses, both new-age and traditional, queued up for IPOs and raised funds of over Rs 1 lakh crore.

We believe the IPO frenzy will continue in 2022 as well. There are big names such as LIC, Ola, Byju’s, Delhivery, NSE, etc. which are lined up. We would advise investors to be cautious and not get carried away with IPO buzz and be selective in investing. The prudent approach is to have a long term perspective instead of focusing only for the listing gains.

At the age of 25-30 with a balance of Rs 10 lakh, where should one invest in 2022 or how should one allot money in his/her portfolio at the start of 2022 to get healthy returns?

Equities should remain the large chunk of your investment if you are in the 25-30 age bracket and invest the rest in the other asset classes. For instance, one can invest around 60-65 percent in equities (considering one has higher risk tolerance) primarily into quality largecaps (Nifty 50 companies) and a small portion into midcap and smallcap, 30 percent should be kept in a mix of liquid and long term debt funds and 5-10 percent in gold.

Now more than a month left for the Union Budget presentation. Do you think it would be a big bang budget and what would be focus areas? Also is there any populist measures given the states elections going ahead?

Given the tight fiscal space and delay in achieving disinvestment targets, we do not expect any big bang populist measures from the government. Nonetheless, we expect the government to focus on reviving economic growth by increasing spending in key social sectors like infrastructure and agriculture.

In the year 2022, what are the key events and risk factors (global and domestic) to watch out for?

Globally, actions from central banks would continue to remain a key monitorable for the markets. Several central banks have turned hawkish given the spike in inflation and if this situation continues, it would be detrimental for equities especially in emerging markets. On the domestic front, the upcoming budget and earnings would be an important trigger for the markets.

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