Santosh Joseph is the Founder and Managing Partner at Germinate Investor Service LLP.
Companies will start releasing December quarter earnings next week. Santosh Joseph, founder of Bengaluru-based Germinate Investor Services, told Moneycontrol that the earnings should be good, given the strong festive demand, an almost normal quarter since the start of the pandemic and good vaccination coverage across the country.
Joseph expects the Union Budget 2022, which is scheduled to be presented in parliament on February 1, to be pro-growth. The government will keep a fine balance between tax and growth, the veteran banking, insurance and asset management professional said. Edited excerpts from an interview:
Omicron cases have been rising in India and globally. Do you still count it as a major risk for the global markets? What are the other risk factors?
The rise of Omicron in India is something that needs to be monitored closely, even though we have positive feedback from the rest of the world on the mild nature of this variant. The fast spread and sheer numbers could still be overwhelming.
Omicron is proof that just when everyone was settling down, a new variant sprung up. Likewise, the markets could experience a surprise when most risks are factored in with something completely new or unexpected.
After a more than 20 percent rally in 2021, what will the market look like in 2022?
The Nifty in 2020 delivered 15 percent and during 2021 delivered 24 percent. These have been great years for the markets. One went into 2021 expecting consolidation at best, but was rewarded with a nice rally.
It’s prudent to assume 2022 could be further consolidation and any percentage of upside could be a bonus. Our expectations should be moderate.
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Considering the current domestic and global environment, what should the portfolio look like for 2022?
One should look at aligning the portfolio to absorb potential shocks. Fragile and recovering markets led by strong stimulus-created liquidity could be prone to heightened volatility. Risks of inflation and unknown factors weigh in for the markets in 2022.
Companies will release their December quarter earnings next month. What are your expectations and do you think earnings upgrades will continue?
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December quarter numbers should be good. We had strong festive demand and an almost normal quarter since the start of Covid in March 2020, on the back of very good vaccination coverage across the country. The earnings could continue as the economy is more prepared and attuned now than before in this post-pandemic scenario.
The other key event in the near term would be the Union Budget 2022. Will it be populist, considering state elections ahead? What are the focus areas?
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Budget 2022 will continue in its mission to stoke growth and strengthen the recovering economy. To that extent, we should expect the budget to be pro-growth. I am sure the government will keep a fine balance to optimise between tax and growth.
Will the focus be more on monetisation in the budget? How much can the government raise via the Life Insurance Corporation IPO expected in the first quarter of CY22?
IPOs like LIC are a step in the government’s activities to monetise and privatise. There are many more companies and industries that could follow in this pathway, thus helping the government with the much-needed financial resources while freeing itself from running these companies.
What sectors look attractive for value buying now?
The markets are fairly valued at an index or sectoral level. The market still offers many interesting and rewarding opportunities for someone who can choose individual companies and businesses that have the edge to outperform in this post-pandemic economy and world.
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