In conversation with Zee Business Managing Editor Anil Singhvi, Manish Sonthalia of Motilal Oswal Asset Management on Monday spoke in length about how stock markets would perform, which sectors will be in focus and where investor should be looking at in the Union Budget 2022, which is scheduled for February 1, 2021.  

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Motilal AMC Director & CIO, Head Equities, said the government's spendings in infra space will continue as the government has made strong tax collection in the last year. Since we are going through third wave of Covid 19, the government may not make an attempt to arrest fiscal deficit which stands at 6.8%. If the government spendings are aimed at public infrastructure, public health and rural sector, it will also act as multiplier effect for job creation, he said.  

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With expected 9.3% to 9.5% growth, Sonthalia said India will be the highest growth economy in the world in calendar year 2022.  

Speaking on the government's disinvestment plan, he said the government has always lagged on this front as we barely saw any divestment, except for Air India, in the last one year. "If the government manages to give final shape to the LIC IPO, it will be a confidence booster for the government. It will give a thrust to its disinvestment plan and we may see action on other such projects too. It will be also important that the government gives some clarity on BPCL and Container Corporation of India divestment, which were due only last year.  

Speaking of realty sector, he said it is already in sweet spot and the government's incentives on affordable housing or any other scheme are very much likely to continue this year too.  

Speaking of market outlook for 2022, Motilal Oswal AMC expert said retail participation has been very strong and will continue to penetrate further. Also, since retail investors focus on small cap and mid cap stocks more, there will be more action on this front going forward in 2022, he said. 

"It has to be noted that there won't be a linear movement in the market, and we will see pullbacks too. The biggest concern would be Rupee. The euphoria related to IPO that we witnessed in 2021 may fizzle out to some extent in 2022 as there are many initial public offering rules changing this year. The action will be back on secondary market and we may see Nifty touching 20,400 in over the next one year. Good earnings this year will also see action shifting back on BFSI space," he added.