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Dalal Street Voice: Budget 2022 focuses on higher capital expenditure and infrastructure spending: Atanuu Agarrwal of Upside AI
The Government has done well on the fiscal deficit so far. It was of course lower than the deficit at the same time last year (which is expected), but the good news is that it was also lower than the equivalent deficit in 2019, Atanuu Agarrwal, Co-founder, Upside AI – said.
The Government has done well on the fiscal deficit so far. It was of course lower than the deficit at the same time last year (which is expected), but the good news is that it was also lower than the equivalent deficit in 2019, Atanuu Agarrwal, Co-founder, Upside AI – said in an interview with Zeebiz’s Kshitij Anand.
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Atanuu has over 11 years of investment experience. He has extensive experience in public and private investing both in India and the US. He has worked across PE, VC, and SPACs (AUM $1bn).
Q) Omicron, US Fed taper fear infuses volatility in markets. Where do you see markets in the next 12 months or so?
A) Things you and I know, are already priced-in. Especially structured, pre-announced events like the US taper.
It’s the unknowns that cause volatility, and that is precisely why accurately predicting short-term market direction is impossible. I might as well toss a coin.
Q) The Budget 2022 is also a few months away. What are your expectations from the Budget? Do you think it will be a populist one that could hurt the fiscal math of the government which is already strained due to COVID?
A) Actually, so far, the Government has done well on the fiscal deficit so far. It was of course lower than the deficit at the same time last year (which is expected), but the good news is that it was also lower than the equivalent deficit in 2019.
Hopefully, this means that Budget 2022 focuses on higher capital expenditure and infrastructure spending.
Q) Which sectors are likely to hog the limelight in Budget 2022?
A) I hope India’s torrid experience with the second wave will mean focus on healthcare. Similarly, supply chain issues have highlighted how dependent we are on China and the rest of the world for critical components.
So, again I hope there is increased focus on R&D and manufacturing. Given the buzz, one would think the EV sector will probably receive a lot of media attention.
Q) The year 2021 will also go down as a year of IPOs when many niche or new-age businesses got listed. How do you sum up 2021 in terms of primary markets and your outlook for 2022?
A) Personally, I think it’s great for all stakeholders – VC/PEs, founders/employees, the companies themselves, the public exchequer, and public market investors.
We want our home-grown start-ups to be able to list in India. In order for our public markets to grow in-depth, we need new-age businesses to attract investors.
These businesses will dominate in the years to come; you don’t want them to be listed overseas. Of course, just like traditional businesses, not everything that lists is going to end up having a positive outcome.
From an IPO investor’s perspective, one should let the quality and unit economics of a business drive long-term decision making, and not FOMO and short-term listing day pops.
One would hope it is more of the same in 2022, but if liquidity dries up due to rising interest rates, IPOs usually are the first casualty.
Q) The year 2021 was a volatile year but bulls managed to remain in control. How do you look at 2021 – key highlights which stand out from a market, fund or business perspective?
A) I think what we discussed above must be the main takeaway from 2021. It will be known as the year when tech IPOs in India truly took off.
It’s also been the year of crypto – if the numbers are accurate, INR 6 lakh crore in AUM and 10 crore investors in such a short period of time is simply mind-blowing (remember the much older MF industry is only 6x larger).
Contrary to expectations, I think we have seen most businesses emerge healthier than they were pre-Covid. Lockdown induced efficiencies are key drivers here.
Finally, it has been a great year for fund managers – 2021 was the year of the rising tide and everyone’s boats are up. It will be interesting to see what happens when it ebbs; especially for new asset classes like crypto.
Q) FIIs remain mostly net sellers especially when it comes to the cash segment of Indian equity markets. How are FIIs looking at India in the light of sooner than expected tapering from the US Fed?
A) FIIs will always be fickle in a rising interest rate environment, and one should expect net outflows. I am cautiously optimistic that Indian markets will be more resilient given the ever-increasing strength of domestic investors.
I just hope domestic participation will sustain even beyond any potential correction that may happen in the short term. Right now, everyone, especially new investors, are used to making easy money in the markets.
Q) Which sectors are likely to hog the limelight in the year 2022?
A) Again, being cautiously optimistic, I think the reopen post-Covid will keep going from strength to strength. The economy is going through the gears, and I think consumption-based sectors should do well.
The auto sector has had a tough year; as supply chain issues get resolved and consumer confidence grows, we may see a strong recovery.
Q) Any particular themes that remained in limelight in 2021 and could well remain relevant and in demand in 2022 as well and why?
A) I think sensitivity to inflation and interest rates (positive or negative) is going to continue to remain a dominant theme.
There are expectations and then there is reality – consensus estimates and macro experts have a tendency to be precisely wrong.
Q) What were your key learnings from markets in 2021 which investors should take note off?
A) At the start of 2021, I came across many folks expecting an imminent correction. They were waiting for a 10-15% short-term correction to deploy funds. Of course, it has not happened.
The markets have gone away from them. I genuinely believe trying to time the markets is more like playing roulette than it is like playing poker.
A “roulette expert” is an oxymoron. Saying a correction will happen, is like saying nothing at all. Of course, it will happen at some point. However, when and how it will happen is unknowable.
Q) What are the Key risks that investors might face in 2022?
A) New Covid variants and inflation are obvious risk factors. In addition, major state elections (especially, UP) could lead to some volatility. There is an outside chance China-India border issues could escalate and have a ripple effect as well.
(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)
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