Budget 2019: Fund Managers see opportunities in consumption, property sectors

Indian wealth and alternative investment managers expect the Union Budget to propose measures that will improve consumption and bolster infrastructure to revive economic growth.

Newly appointed Finance Minister Nirmala Sitharaman will present her first budget on Friday. Growth slowed to a five-year low of 5.8 per cent in the first three months of 2019, amid a liquidity crunch at non-banking financial companies. That has put pressure on recently re-elected Prime Minister Narendra Modi to deliver on a stimulus plan.

Here is a round-up of views from fund managers on current opportunities in the market:

Nalin Moniz

Chief Investment Officer, Alternative Equity, Edelweiss Asset Management Ltd

“Liquidity conditions are slowly normalising, the cash squeeze should normalise in one or two quarters,” Nalin Moniz said. He expects to see a broad-based revival in earnings in the latter half of FY20. He also sees opportunities in consumption, exports and financial services sectors on a 5-year horizon.

“Over the longer term, both consumer goods and discretionary consumption are expected to boom as the Indian economy grows from $2.7 trillion toward $5 trillion. The Nifty’s current valuations are incomparable to the past, as index’s composition has shifted from manufacturing toward financials.”

Vijay Krishna Kumar

Head of Liquid Alternative Investment, IDFC Asset Management Co

“The budget will be another non-event accounting exercise. It’s difficult to get excited without clarity on the Bimal Jalan Committee outcome on transfer of the RBI’s surplus funds to the government,” Vijay Krishna Kumar said. He wants to see a concerted policy response to address the NDFC crisis. “Without something concrete, its hard to build a bull case on the consumer segment. The deficient monsoon is a concern, as the rural economy and wages were already stressed. We are long vega going into the budget announcement.”

Umang Papneja

Senior Managing Partner, IIFL Wealth Management Co.

“The liquidity squeeze due to the credit crisis has created an investment opportunity. The flight to quality trend since September is likely to continue for some time,” Papneja said. He believes that the real estate sector could benefit from the turmoil: the introduction of a regulator may help drive consolidation and stronger players are likely to get cheaper credit. “Its a divergent time for equities, as only a few stocks are driving the indexes higher, it is time to gradually start investing in select mid-caps stocks after a sharp correction,” he said.

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