Top 6 expectations from D-Street from Budget 2022: Vinit Bolinjkar of Ventura Securities

Vinit Bolinjkar, Head of Research, Ventura Securities Ltd said that investors are expecting capex revival announcements in the upcoming budget to support growth for sectors like capital goods, engineering and construction, which will significantly improve order booking in power, utilities and capital goods companies.

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In an interview with Zeebiz's Kshitij Anand, Bolinjkar believes that the market has entered the pre-budget rally and it is pricing in the positive guidance from the Budget-2022.

Edited excerpts:

Q) Despite muted Friday, Indian markets closed with gains of over 2%. What led to the price action on D-Street?

A) The market has entered the pre-budget rally and it is pricing in the positive guidance from the Budget-2022.

Though, FIIs remained net sellers and sold Rs 5,840 cr worth of securities in January 2022, DIIs remained positive and infused net Rs 13,844 cr and countered the FII sale.

Q) What are your expectations from markets for coming week? Any important levels that investors should watch out for?

A) Although the market has entered the pre-budget rally, we are expecting the indices to remain range-bound (between 60,000 to 63,000) with a low single-digit gain in the next half of the month.

Uncertainty over fiscal position and populist measures in the upcoming budget could restrict any major gain in the broader indices.

New Omicron cases and Q3 earnings are the other factors that will play a key role in trading activities.

Results of heavyweight IT companies are out, and they have reported a decent set of numbers, however, the next 15 days will depend on the bank's Q3 results.

Q) In terms of sectors – Power, Utilities, capital goods led the rally. What led to the price action?

A) Investors are expecting capex revival announcements in the upcoming budget to support growth for sectors like capital goods, engineering and construction, which will significantly improve order booking in power, utilities and capital goods companies.

Q) Can we say that we are in a pre-budget rally – what does the trend suggest?

A) Yes, as mentioned earlier, the market is seeming to be entered in the pre-budget rally and it is pricing in the positive guidance from the Budget-2022.

However, we are expecting the indices to remain range-bound (between 60,000 to 63,000) with a low single-digit gain in the next half of the month.

Q) Greaves Cotton, Deepak Fertilisers closed the week with strong gains what led to the price action? And, what should investors do?

A) All the fertilizer stocks are up. Bumper production is anticipated in major crops, which would result in a significant jump in the demand for fertilizers.

Shortage of fertilizers has also triggered the prices which could improve unit realization for the companies and accelerate revenue performance.

Greaves Electric Mobility, a subsidiary of Greaves Cotton, sold over 10,000 EVs in December 2021. This includes both electric 2W and 3W.

The company had inaugurated its largest EV production facility in Ranipet, Tamil Nadu. The plant is part of the INR 700 cr investment roadmap announced by the company to expand its growing share in the Indian EV market, especially 2W and 3W.

EV revenue is currently contributing 20% of the Greaves Cotton revenue, and reducing the dependency on its IC engine business. This overall story has triggered the price in the past few days

Q) What does D-Street expect from the Budget?

A) Here's are 6 expectations from Budget 2022:

1) Capex Revival to support growth for sectors like capital goods, engineering, and construction.

2) Sops for EV industry and its value chain system.

3) PLI scheme in defence and capital goods segment to reduce import dependency.

4) Further financial support and export-related reforms for the MSME sector. They took the worst hit during the pandemic and such measures will help to improve their productivity.

5) Tax benefits on housing loans both for interest payment and principal repayment could be increased by INR 50,000 each from the current limit of INR 2 lakhs and INR 1.5 lakhs, respectively.

6) 80C limit to be increased from the current INR 5.0 lakhs to INR 7.5 lakhs. It will increase investments in Life Insurance products and ELSS schemes.

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