"The government is likely to meet its capex target for FY25, given its strong focus on infrastructure development and capital-intensive sectors," Anirudh Garg, Partner and Fund Manager at Invasset said in an interview to Moneycontrol.
Furthermore, he believes an increase in capex in the upcoming Budget is likely, as it aligns with the government’s goal of stimulating economic growth and creating jobs.
Among sectors, according to him, the capital market theme remains attractive due to rising retail participation, increased financialization of savings, and structural reforms. The growth of equity markets, supported by robust corporate earnings and a steady inflow of domestic and foreign investments, enhances opportunities for companies in the capital markets space, said Anirudh with more than 17 years of research experience in the stock market.
What should be the priority for the new RBI Governor?
The new RBI Governor should prioritize balancing growth with inflation control. This involves ensuring adequate liquidity in the banking system to support credit flow while maintaining inflation within the target range. Additionally, fostering financial stability by addressing stressed assets and managing external risks like currency volatility should be key. Accelerating digital financial inclusion, streamlining regulatory frameworks, and fostering innovation in banking and fintech should also be a focus. Strengthening the bond market and ensuring efficient transmission of monetary policy to enhance credit availability are critical to boosting investment and economic recovery.
Do you strongly expect a repo rate cut in the February policy meeting, after the change of guard at the RBI?
A rate cut in February seems unlikely unless inflation shows a significant decline from current levels. While a change in leadership could prompt fresh perspectives, policy decisions are primarily data-driven. Inflation remains a key concern, especially with global crude oil prices and food prices fluctuating. The focus will likely remain on anchoring inflation expectations, and any rate adjustments will depend on evolving macroeconomic conditions rather than the leadership change alone.
Is it better to stay away from microfinance institutions given the potential earnings risk?
Microfinance institutions (MFIs) face heightened risks due to their exposure to rural and low-income segments, which are susceptible to macroeconomic shocks and weather-related disruptions. However, some MFIs with strong risk management frameworks and geographical diversification remain resilient. Investors should evaluate MFIs with robust asset quality, adequate capital buffers, and conservative provisioning. Avoiding weaker players with high delinquency rates is prudent, but selectively investing in well-managed MFIs with growth potential may still offer attractive returns.
Do you see the market hitting new high only post Union Budget? Will 2025 be another strong year for the market?
The market’s trajectory leading up to the Union Budget will depend on a combination of global cues and domestic earnings performance. The Budget’s announcements on areas such as capex, fiscal consolidation, and reforms will play a significant role in shaping investor sentiment.
Looking ahead to 2025, factors such as economic recovery, corporate earnings trends, and government infrastructure initiatives could provide support to the markets. However, external influences like global economic conditions, interest rate movements, and geopolitical developments will also be key determinants of market performance.
Do you think the government will be able to complete the targeted capex for FY25? Will the government increase capex in the upcoming budget?
The government is likely to meet its capex targets for FY25, given its strong focus on infrastructure development and capital-intensive sectors. Accelerating project execution and addressing financing bottlenecks will be crucial. An increase in capex in the upcoming Budget is likely, as it aligns with the government’s goal of stimulating economic growth and creating jobs. The emphasis may be on transportation, energy, urban development, and defense to sustain the momentum.
Are you bullish on the capital market theme?
Yes, the capital market theme remains attractive due to rising retail participation, increased financialization of savings, and structural reforms. The growth of equity markets, supported by robust corporate earnings and a steady inflow of domestic and foreign investments, enhances opportunities for companies in the capital markets space. Players involved in asset management, brokerage, and financial technology are well-positioned to benefit. However, valuation discipline and sectoral analysis are essential to identify sustainable growth opportunities within this theme.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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