ETMarkets Smart Talk: I give 4 out of 5 to Budget 2023 which is pro-growth: Prateek Pant

In an interview with ETMarkets, Pant said: “I would give it a rating of four. The budget was prudent and growth-focused, while not tinkering much with the existing tax rates, barring rationalizing the new tax regime” Edited excerpts –

What is your take on the Budget 2023? Do you think the govt was able to walk the talk and keep the growth agenda in mind?
Yes, the FY24 budget builds on the foundation of sustainable growth laid out in the previous budgets while signaling policy continuity with a thrust on public capex, enhancing the ease of doing business and boosting exports and manufacturing.

Post Budget what is the kind of impact you see on markets? Where do you see the markets headed?
In the short term the direction of equity markets is impossible to predict. Apart from the budget, there are many global and domestic events, including the ongoing corporate earnings season which will have an impact on the markets.

However, the government has resisted the temptation to be populist, despite this being a pre-election year budget. This will come as a relief.

Which sectors are likely to benefit the most from the Budget 2023?

While it is difficult to pinpoint any one sector, from a bottom-up perspective, the team at White Oak finds opportunities in private banks, healthcare, consumer discretionary, and industrials. The budget announcements had something for each of the above sectors.

Do you think the Budget 2023 had something for the common man?
Certainly, the taxpayers who have opted for the new regime will stand to benefit from the revision in tax slabs and tax rates.

Apart from just looking at tax rates alone, what is important to note is the government’s thrust towards rationalization of compliances or regulations. These measures will help ultimately help boost growth and enable job-creation.

How will Budget 2023 impact investors’ community?
As we have stated earlier, investors will view the budget announcements in a positive light. The budget is pro-growth while pitching for credible fiscal math. The capex boost is welcome, as is the message of continuity, given the global uncertainties.

What should be the investment strategy for long-term investors post Budget considering he/she wants to put around Rs 10L?
It is impossible to time the markets. The most exciting part about the Indian markets is the potential to generate alpha and thus the opportunity cost of market timing is also very high.

Over long term, returns from equities have trumped that of all other asset classes. However, as has been the recommendation earlier as well, any allocation towards a particular asset class should ideally be a function of the investor’s risk profile, in consultation with his or her financial advisor.

How do you rate Budget on a scale of 1 to 5 and why (5 being the best)
I would give it a rating of four. The budget was prudent and growth-focused, while not tinkering much with the existing tax rates, barring rationalizing the new tax regime.

FIIs have been nervous ahead of the Budget 2023. How do you see flows panning out in the year?
FII flows are determined by many variables, and outflows have resumed lately. The budget is certainly a positive tailwind but whether it will alone be enough to attract inflows is impossible to project at this moment.

In any case, over the last two years, domestic institutional inflows have acted as a strong counterbalance to the FII sell-off.

With the Budget over, US Fed commentary will be an important factor in deciding the trend. What is your take on the US Fed action?
There is no firm evidence to suggest that Indian markets have underperformed US markets in a rate hike cycle.

If the macro events of the last couple of years has any lesson, it is that actual market returns during and following major macro developments prove widely off the mark compared to what could have “logically” been expected even with perfect prior knowledge of those macro events.

As we have stated before, we view macro as a source of risk, from which we try to shield the portfolio’s relative performance rather than seek any opportunity to generate alpha.

(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. These do not represent the views of Economic Times)