Dalal Street Voice: Issuance of green bonds in Budget 2022 is a great move to attract global investors: Prakarsh Gagdani of 5paisa.com

Prakarsh Gagdani, CEO, 5paisa.com said that the focus of Budget 2022 was on clean energy and it was one of top priority in the budget. The issuance of green bonds is a great move to attract global investors.

Gagdani is a highly accomplished professional with nearly 14 years of cross-functional experience in managing Strategic Business Unit Management, Advisory, P & L Management, Product Development, and Business Development with an overall business perspective.

In an interview with Zeebiz's Kshitij Anand, Gagdani said the Nifty is fairly valued, and a pick up corporate earnings is likely to drive the index in this year. We expect Nifty50 to scale upto 19500-20000 by the year-end. Edited excerpts:

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Q) What is your take on Budget 2022? Do you think it managed to address the growing needs of Asia’s third-largest economy?

A) The Union Budget 2022 presented by the finance minister is largely a growth-oriented budget. There are certain measures which are being taken for individual sectors which should be very positive.

This budget would provide opportunities to various industries as it has focused on digitalization, healthcare, railways, education, financial services etc. to accelerate India’s growth.

So, it seems that it has managed quite well to address the needs to emerging India.

Q) Where do you see markets heading post markets – fresh record highs? Any specific target that you have for December 2022 and why?

A) Market could see some consolidation in the short term given that the crude oil prices are at multi-year highs and bond yields have risen sharply in the last few days.

However, in the latter part of the year, we expect the crude prices to cool off again. At this level, Nifty is fairly valued, and a pick up corporate earnings is likely to drive the index in this year.

We expect Nifty50 to scale upto 19500-20000 by the year-end.

Q) The Budget 2022 bet big on infra which would also mean higher job creation as well as more loans. So, will that bring PSU banks under focus?

A) For the banking and financial sector, the Budget has various positive announcements such as proposal to set up Digital banking Units by Scheduled Commercial Banks, higher allocation to capital expenditure along with focus on higher job creation.

More credit for small business is likely to benefit the PSU banks and hence, we could see some good interest by investors in this pocket as they are also available at lower valuations.

Q) What is Good, Bad, and Ugly on Budget from a stock market perspective?

A) The Good thing is that increased capital expenditure augurs well for the stock market as it will have a positive impact on various sectors such as capital goods, construction, cement, etc. Focus on affordable housing under PMAY is also a big positive.

The bad thing was that there were no new incentives for encouraging investor participation in capital markets, which could have enhanced more shifts from savings to equities.  

Q) Budget 2022 was tabled that would address the needs of the economy for the next 25 years. Investors, who invest in 2022 should ideally have a time horizon of 10-20 years?

A) The Finance Minister has announced to step up public investment by raising capital expenditure by 35.4% to Rs 7.5 lakh crore, or 2.9% of the GDP. This is likely to kickstart an “upright cycle of investment” which will benefit in the long term.

The Budget has focused on strong capital formation in the economy which is likely to accelerate the growth path.

Hence, it is a good time for investors who are looking to invest for the next 10-20 years India is likely to outperform the other emerging nations.

Q) What was in store of mutual fund investors post Budget 2022? Has anything materially changed?

A) The budget may not have much for mutual fund investors. But given that Budget 2022 is likely to have a positive impact on the economy over a longer period, investors can look to invest in diversified equity schemes which can benefit and provide good returns.

Q) Post Budget we saw many thematic funds related to infra being launched by fund houses. Why fund managers are chasing infra as a theme? And, will infra be the theme of the next decade?

A) The Finance Minister has put a great emphasis on infrastructure development, under the new PM GatiShakti program. This is likely to provide a push to Roads, Railways, Airports, Ports, Mass Transport, Waterways, and Logistics Infrastructure.
We believe that this is likely to be beneficial for investments in the infrastructure segment.

Hence, investors can benefit from betting on the infrastructure sector funds which is driving fund managers to launch schemes on this sector.

Q) Budget has a special focus on renewable and as well as a green themes? How will green bonds help support the infrastructure theme? Will the role of the ESG theme become more prominent?

A) Green bonds differ from conventional bonds in the way that the issuer pledges to use the amount raised purely towards financing projects that have a net positive contribution to the environment.

Focus on clean energy was one of top priority in the budget and the issuance of green bonds is a great move to attract global investors.

Q) Any big themes that you think are emerging post Budget 2022?

A) Budget 2022 was focused on the theme of development at large. The themes that could provide outperforming returns include segments like steel, cement, renewable energy, biofuels, healthcare, education, and financial tech.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)