Budget 2024: DSP’s Anil Ghelani says banking and IT sectors may get boost from FM Sithraman’s announcements. Here is why

Union Budget 2024: Finance Minister Nirmala Sitharaman will present the Union Budget 2024 in Parliament on July 23. The full-year Budget will follow an Interim Budget presented in February due to general elections.

Anil Ghelani, Head of Passive Investments and Products at DSP Mutual Fund, believes that the government will focus on executing projects rather than making any structural changes to the upcoming Union Budget 2024.

In an exclusive interview with Mint, Ghelani spoke about his Budget expectations. “Rather than trying to make any structural change, the focus would be simply on keeping your head down and executing,” he said.

Ghelani's view on the February interim budget was positive as the focus was on improving consumption, capex and consolidation - the three Cs.

“The ₹11.11 lakh crore capex they announced will have a big positive impact on job creation, economic growth, and also, that will lead to a lot of small indirect benefits which will be sustainable over a much longer period of time,” Ghelani observed.

Sectors to look out for after Budget 2024:

The central government is expected to focus mainly on increasing allocations to strengthen the country's infrastructure and construction sector, with a high allocation of capital expenditure of ₹11.11 lakh crore.

“From being 1.7 per cent of GDP prior to the pandemic period, this capex figure is now double, at 3.4 per cent of GDP,” Ghelani said, adding that the government may also focus on increasing the allocation for sustainable growth in the rural economy.

According to the fund manager, the infrastructure push will have an immediate positive effect on the industries and companies directly involved in infrastructure development. It will also assist in other long-term employment opportunities to fuel sustainable growth.

Other than infrastructure and construction, pockets of equity market like the Banking and Financial Services and Insurance (BFSI) sector remain relatively attractive, as it has been underperforming despite good fundamentals and strong balance sheets.

“In the last two, three months, the banking sector has seen a good rally; but if I compare the earnings of banking stocks, especially Nifty which has a weightage of 30-35 per cent of BFSI, the profit pool (PAT) which has grown more, in comparison to the market gain, which is lagging," said Ghelani. “I believe it has big potential if the money flows that way.”

There is also good potential in consumer discretionary companies, which include auto and auto ancillary companies. India's IT sector remains attractive, considering it is a contra bet for a turnaround in the medium to long term, according to the fund manager.

Capital market investors' expectations:

According to Ghelani, capital market investors will have reasons to cheer as the government's focus on existing areas will provide stability and continuity.

“This will ensure companies can continue with their capex plans, their growth strategies and their long-term goals can remain intact. Capital market investors would find this scenario very favourable in my view,” said Ghelani.

While the fund manager believes that there is growth and a positive outlook in corporate earnings, valuations do appear high in certain sectors and segments of the market. Investors and analysts have to look out for red flags in the market, he pointed out.

Is the current situation favourable for retail investors?

At a time when the market is breaking new all-time highs now and then, there is an influx of retail investors who are looking for the right time to enter the market.

“I do suggest that as a retail investor, you should be cautious. To take a prudent approach, my personal strategy would be to go with SIPs instead of adding any lumpsum investments,” said the fund manager.

Before making large lumpsum investments, one should evaluate risks and look into dynamic asset allocation or multi-asset funds which keep investors' exposure spread across various asset classes like equities, fixed income, and commodities. People need to invest according to their personal goals, Ghelani noted.