Sonam Srivastava is the Founder of Wright Research
In the world of finances, any positive surprise is usually buoyed by the market sentiment. Going by the same breath, any policy measure announced in the upcoming Union Budget to ease the fiscal path or boost growth beyond the expected lines would be a surprise, says Sonam Srivastava, who founded Wright Research.
“Steps to clean up the divestment pipeline and speed up the LIC public issue would be one such surprise,” she says in an interaction with Moneycontrol.
“Taxation or regulation of cryptocurrencies could also come as a surprise.”
Markets would see a sharp rise on the budget day primarily because of growth-related measures. “Any policy that makes the Indian markets more attractive than its peers would be praised,” she says. Excerpts from the interview:
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The market corrected more than 5.5 percent in the last one week. Do you think it will continue before the Budget?
The Nifty is wiping down the gains of a previous couple of weeks very rapidly in this week’s crash. The fall is in line with global peers. Fear of Fed taper, increase in interest rates, and tightening of fiscal policy by the RBI are some reasons for not letting the market get confidence. The earnings season hints at shrinking margins and a decrease in rural demand. We cannot rule out a fall of another 3-5 percent.
What could be a surprise in the Union Budget?
Any policy measure that eases the fiscal path or boosts growth beyond the expected lines would be surprising. Steps to clean up the divestment pipeline and speed up the LIC public issue would be one such surprise. In addition, any relief from the taxation front in the long-term capital gains taxed or personal tax would also be highly welcome as a surprise. Taxation or regulation of cryptocurrencies could also come as a surprise.
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What could be the key announcements that might lift the market sharply on the Budget day?
The markets will see a sharp rise on the Budget day primarily because of growth-related measures. Any policy that makes Indian markets more attractive than its peers would be praised. Steps in this direction would be a strategic infrastructure plan focussed on clearing up supply-side bottlenecks, cleaning up existing deficiencies, and making asset monetisation more robust. Any policy to boost the cyclical sectors would also be cheered as people are looking at cyclical recovery as the way forward.
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Do you think the government will announce a growth-oriented Budget or a populist Budget, especially ahead of states elections, on February 1?
I would not be surprised to see a Budget that is more populist than the last few years in the run-up to the elections. Uttar Pradesh and Punjab elections are a significant focus area for the government, and the agriculture sector could get an excellent representation because of that. Moreover, the rural demand is struggling, and we could see support towards the struggling sections of the economy through MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) expansion or policy support to MSMEs, which would not be a bad thing.
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Adani Wilmar, the second IPO of 2022, will open on January 27. What would you suggest investors on this issue? Do you think it’s overpriced?
Adani Wilmar is a joint venture between Adani Group and Singapore-based Wilmar, which sells cooking oils under the Fortune brand and various other food products. It has had a significant growth and profitability record for the last three years.
I would see this as good stock entering the FMCG sector. A price band of Rs 218-230 does not seem very expensive for the stock, given that its EPS was 64 last year.
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Will FIIs remain net sellers in the first half of 2022, given the risk of rate hikes by Fed and rising inflation concerns?
Given the risk of rising rates amid rising inflation in the US, FIIs are selling stocks from richly valued sections of the global market like the Indian market or the tech basket right now, and this continues for some time. Only when there is greater clarity on the after-effects of the Fed move will this uncertain environment ease.
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