ETMarkets Fund Manager Talk: Budget likely to give thrust on capex cycle revival: Pankaj Murarka, Renaissance Investment
“A revival of the capex cycle is at the top of the government’s agenda, and the same is likely to get thrust in the current budget, in our opinion,” says Pankaj Murarka. WealthBasket curator and chief investment officer at Renaissance Investment Managers.
Edited excerpts of interview:
The start to the New Year has not been good for markets. Given the volatility due to persisting global risks, how should investors approach markets?
Similar to 2022, this year is likely to be a volatile one, wherein we can potentially see-saw with news flows around recession and inflation. In this backdrop, investors should focus on businesses which are linked to the domestic economy. Importantly, investors should avoid poor quality businesses and companies with high debt.
Do you foresee a capex-heavy Budget this time in view of the PLI schemes and infrastructure boost planned by the government?
Over the last 2 years, the government has given significant thrust on ‘Make in India’ via measures like the PLI scheme and corporate tax cut, amongst others.
A revival of the capex cycle is at the top of the government’s agenda, and the same is likely to get thrust in the current budget, in our opinion.
In the run-up to the Budget, which are the sectors that will see most of the action? Which are the sectors you would recommend getting into?
We believe the budget would focus on recovery in rural income/demand, Make in India and increasing digitalisation of the economy.
These are essentially themes which are likely to be multi-year growth opportunities for India. From a long-term perspective, we are positive on sectors like BFSI, consumer discretionary, automobiles, capital goods and chemicals, amongst others.How has your WealthBasket performed in 2022?
Despite a challenging year, our WealthBaskets have performed well in 2022. Most of our funds have delivered returns in the range of 15-18%, which is a substantial outperformance versus the benchmark.
What are the key parameters/metrics you look at while choosing stocks in your portfolio?
We are growth-biased investors. Within the growth theme, we would like to buy companies which can consistently compound their earnings for a longer period of time.
Apart from growth, we like companies with strong management and balance sheet quality, which helps them gain market share in the longer run. In terms of valuations, we buy companies at reasonable valuations and are cautious of companies with steep valuations.
Which sectors/stocks are looking attractive to you and would want to add to your portfolio in 2023?
In the wake of global uncertainties, we prefer sectors linked to the domestic economy. We are positive on sectors like BFSI, consumer discretionary, automobiles, capital goods and chemicals, amongst others.
Retail inflows remained buoyant in 2022, do you expect the buoyancy to sustain in this year too?
India is grossly under-penetrated as far as financialization of savings is concerned. Despite strong inflows and new demat account openings in 2022, the penetration remains significantly lower in India. Given the long term opportunities and increasing digitalisation, we believe buoyancy in retail inflow will sustain in the long run.
Which pockets within the midcap and smallcap segment look attractive to you and why?
Within the midcap and smallcap space, investors should invest based on the inherent strength of the investee companies. In this stock selection process, investors should have heightened focus on strong management and low leverage. This would help in navigating through volatile times in 2023.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of the Economic Times)
