What has changed for the markets after the Budget 2021? The Government in this year’s Budget 2021 has taken a bet on the growth of the stock markets and it appears to be the correct environment for this bet to bear fruits, Samir Arora, Founder and Fund Manager at Helios Capital told Zee Business Managing Editor Anil Singhvi. The Budget has been very good for the markets and the economy, he added.   

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He said the markets have been doing well. The Markets were in a tailspin days before the Budget announcements on anticipation of negative commentary on taxation and cess front, Arora said. 

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On the issue of fiscal deficit which have ballooned for this year and are expected to remain at 6.8 per cent, much above the comfort level, Arora said that most governments across the world have let their fiscal deficit targets slip.  

The government has also cleaned up its balance sheets, he said giving example of the FCI outstanding which has been included in government balance sheets and is now a major reason for the higher fiscal deficit.

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He said that the Government’s decision to privatise PSU Banks and not just divest, is a big deal. Another important announcement was related to capital expenditure, which is being increased instead of government putting money for meeting subsidies.  

The government’s approach to focus on developing infrastructure instead of looking at consumption only is a good thing, he further said. 

The world’s focus now is not much on the increased fiscal deficit, he pointed out. 

Stock Markets – Upside Potential and Downside Risks 

If one looks at the Year-to-date data, it appears that the market upside has not been much and is at 7-8 per cent. Over the last three years, the gains have been 15-20 per cent and not much as against the gains seen over the last six months which could be around 50-60 per cent. So, there could be a short term correction because of the short term rally, he added. 

The positive now is that the government is now in the mood to spend money when there is a recovery which is bound to happen even in the absence of government efforts. This is expected to only boost the economy further, he opined. 

The interest rates are low, FII inflows are still strong and Indian Mutual Funds have still not put enough money and instead have withdrawn amid the pandemic. There could soon be a feeling of losing out, he said indicating that this feeling could trigger fresh investments. 

Sectors to watch out for 

Arora said that the, new investors should look to invest in sectors like pharma, IT, private sector banks, chemical sectors.