Hope there is no increase in capital gains tax: Alchemy Capital

I think for us, what would be important is that from an economy perspective, we are looking at: One is that the government should focus on fiscal consolidation. And continue to spend on capex or capital expenditure or on infrastructure like they have been doing over the last few years. The past year budget saw an allocation of almost ₹7.5-lakh crore on capital expenditure. This year, upwards of ₹8-lakh crore — 15 per cent increase from last year, is what we are expecting.

Second, on the taxation perspective, there is a talk of rationalisation of capital gains tax. I hope there is no increase in the tax rates per se, because India is a capitalist economy. We have seen how household retail investors have put their faith in the markets, providing capital for Indian companies to grow. So, we hope that the government does not tinker with the tax rate. There is some rationalising the time period — for example, long-term capital gains on equities is one year; but for other assets, it is two/three years.

Third, PMS is not considered a qualified institutional buyer (QIB); we have made presentations through our association. The government should allow PMS to participate in IPOs and as anchor investors and provide capital.

And we also expect the government to continue to allocate more and incentivise manufacturers/companies to do more capex.

I think 2022-23 was a little bit of a tough year. Because of the Russia-Ukraine crisis, energy prices went up, costs went up, there was a dislocation in supply chain. And, if you really look at the results of companies, while the top line was quite robust, the bottomline was impacted because of the impact on EBITDA margins with higher raw material, energy and power costs.

We believe that it is settling down now — oil has come back below $90 a barrel, while the war is still on. To that extent, the uncertainty is still there. But we think that 2023-24 should be a decent growth year for India and some of the margins that the companies have lost outright, should be able to claw back in 2023-24, because commodity prices have fallen. So, margin should improve in the fourth quarter of this year, and the next year as well.

And this year, the monsoons are reasonable and if the government spends money on rural infrastructure being the last year before elections, then we are hoping that there should be a revival in rural demand as we progress through the year.

I think the first quarter could be in a situation where the markets are consolidated. And this is also happening because we have seen negative flows from FII in the beginning of this calendar year. They are moving their investments to China — the whole opening up of that economy, and to fixed income — it may be attractive for some investors to invest in fixed income.

But long-term investors, we continue to see a flow into equity should continue. In terms of sectors, we are quite bullish on auto and auto components, capital goods, select pharma companies and private sector banks.

No, we are not a PE fund. We would look at that opportunity at some point in time. I think we should be able to talk about that and launch something maybe a year down the line.