ETMarkets Smart Talk: Govt could maximise spend towards infra in Budget 2023 which has highest multiplier effect: Gaurav Misra


“I would hope to maximise spending towards sectors such as Infrastructure, which have the highest multiplier effect on the economy,” says Gaurav Misra, Co-Head Equities, Mirae Asset Investment Managers.

In an interview with ETMarkets, Misra said: “I think India is more of a long-term structural growth opportunity and should remain the core of the portfolio,” Edited excerpts:

2022 closed on a positive note, and 2023 started off on a muted note tracking global cues ahead of the Budget. What is your take on markets?
I have no definite view on how the markets might behave in the short term. In the near-term they could reflect the fear and uncertainty of the vulnerable Global inflation/growth environment.

However, I believe that investors should be looking at the markets with a long-term perspective and I believe that they will deliver satisfactory, better than other asset class, returns.

The December quarter earnings season will start in the second week of January. Sectors that are likely to do well, and which may lag?
Overall, there should be a close to double-digit earnings growth in the quarter. Sectors that are expected to do well are banks and consumer discretionary including automobiles and cement. Metals might not do well given the correction in commodity prices.

We saw a little bit of weakness in the rupee – what is your call on the currency movement in 2023?

Given India’s relative macro stability and the strength in the USD so far, we do not expect a major untoward pressure on the INR in the current year.

With global uncertainty, DXY could see spikes which would result in short-lived weakness of EM currencies including India.

Eventually, we expect the INR to have a better year in 2023 especially if one believes that Indian macros will hold up. What are your expectations from Budget 2023?
My expectations are that I would want the government to pursue the path of prudent fiscal consolidation without dampening any growth impulses.

Given the global headwinds that would be most important. On other hand within the budgetary constraints, I would hope to maximise spending towards sectors such as Infrastructure, which have the highest multiplier effect on the economy.

Which sectors are you overweight/underweight on in 2023 and why?
Our weights are driven on a bottom-up basis and will depend on how the circumstances evolve and could change during the year. The current stance is driven by the better outlook of the domestic story.

Thus, we are currently overweight in sectors such as banks, other financials, automobiles, discretionary consumption, and telecommunication.

Conversely, at this point, we are underweight in global cyclicals – metals and marginally in the IT sector.

With global equities down in double digits – do you see this as a good opportunity to diversify globally or India still remain a preferred play? What are your views?
I think India is more of a long-term structural growth opportunity and should remain the core of the portfolio. Amongst other large markets, a few could be looked at as trades for a valuation catch-up.

Mirae offers global geography and thematic ETFs which can be considered for such trades, which I feel should be a small/measured part of one’s exposure.

How should one play the small & midcap theme in 2023?
This will have to look at selectively and, on a bottom-up basis. While last year the small caps did underperform the large caps the midcap and small-cap indices have performed better than the large-cap in CY20 and CY21.

At this point, in aggregate midcaps trade at a premium to their historical relative valuations and the small caps are at the average historical discount to the large-cap.

Within each of these, there are large variations on the basis of sectors and even within stocks in a sector.

While we believe the overall India growth story will be broad-based in the coming years, given chances of high volatility during the course of CY’23 I would think the small and midcap allocations should not be disproportionately increased.

Alternatively, they could be left to the discretion of fund managers through the flexi/multi/Large/Mid cap offerings.

What will work in 2023 – growth or values?
To me Growth is a subset of value and so it will be a prudent stock selection that will work. There has to be a price-value gap in the stock. The value of the stock is derived from various parameters including the character of the business, its competitive positioning, its growth outlook, etc.

The price is what the market throws up every day. If by growth one implies growth stocks irrespective of price that does not work, at least in the long term.

Similarly, if by value one implies poor low-quality/low-growth businesses available at cheap multiples – that will also not work in the long-term.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)



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