Manish Jain is the Fund Manager at Ambit Asset Management
Finance Minister Nirmala Sitharaman will present the Union Budget at a time when the country looks for bold steps towards infrastructure upgrade, rural housing and income generation, among a host of other areas that call for serious measures as the economy wriggles out of the pandemic blues.
“In the run-up to the elections, we would expect a strong growth-oriented Budget and that can be a game-changer,” says Manish Jain, who is the Fund Manager at Ambit Asset Management. Sharing his views with Moneycontrol, Jain says he expects status quo on direct taxes in the Budget. Excerpts from the inuteraction:
What are the key factors that support your statement ‘GDP to grow 3x-plus in the next decade on the back of structural growth drivers’?
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We do believe that India’s economy is on a steady growth path for the next decade on the back of strong growth in the agriculture sector, revival in private sector capex, strong government capex pipeline, demographics and rising discretionary consumption. We believe that these factors will propel the Indian economy on the path to $ 10 trillion in a decade and a half.
Is it only a midcap and small-cap focussed (TenX) portfolio? If yes, then why did you choose only mid-caps and small-caps over large-caps?
It’s a flexi-cap portfolio that will have a maximum of 25 percent exposure to large caps. The portfolio remains largely biased towards mid and small caps because we believe as India embarks on the journey on growth, mid and small caps will create a larger quantum of wealth for investors. The idea is to find the large-caps and mid-caps of tomorrow.
What are the key sectors that will contribute maximum to the GDP growth you have projected for next decade?
India, as we know, it is changing quite fast. The first sector that we are bullish on is the BFSI, this journey cannot be completed without the participation of this sector. Second, the per capita GDP rises to $ 7,000 discretionary consumption will play an important role.
Tech-oriented stocks, electric vehicles, new age unicorns and the environment are some of the other sectors that are likely to do well.
What are the parameters you have decided while selecting stocks for TenX portfolio? Do you think investors can follow the same parameters to make their own portfolio?
We will continue to be guided by our Good & Clean philosophy which is very elaborate and is proprietary to Ambit, hence making it tough for investors to copy.
Mid and small caps generated 1.6x/2.5x better return than Sensex (large caps) during the 2003-2007 rally. Do you think it will be similar kind of situation or much better in coming decade?
We would want to believe that as the economy remains on a strong footing and as markets enter into a phase of extended bull-run mid and small caps will yield better returns as they graduate to the next level and become bigger and more successful.
Also read – Budget 2022 should take a long-term view for the EV sector
Budget is the key event to watch out for now. What are the key things that most likely to come up on the government’s agenda in Union Budget 2022?
More spending, rural focus and status quo on direct taxes are some of the expectations from the Budget 2022.
Do you think it will be a game changer Union Budget from the government and it will be able instill confidence at FII desk about India’s growth story?
Yes, in the run-up to the elections we would expect a strong growth-oriented Budget and that can be a game-changer.
What are the possible announcements that can drive stellar rally on the Budget day?
Rural housing focus, infra spend to accelerate, and strong support for rural incomes should be the key announcements to watch out for.
Also read – Elevated demand for work, missed rural infra targets: Centre may hike allocation for rural development
Do you expect the market to give 15-20 percent return in 2022?
Yes, strong earnings growth, low-interest rates and controlled inflation should be the key triggers.
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