Budget 2022 | Policymakers are trying to find a way to put the economy back on track, says Ankit Yadav of Market Maestroo

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Ankit Yadav is the Wealth Manager (USA) and Director at Market Maestroo

Ankit Yadav, wealth manager (USA) and director at Market Maestroo, feels agriculture will get more benefits from the budget this time due to some past events. Besides, autos, banks, NBFCs, fertilisers and cement will also be in focus and investors will have to keep an eye out on little-known speciality chemicals, Yadav says. “As a wealth manager, the foremost thing to watch in this budget is fiscal deficit.”

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What are your expectations from Budget 2022?

In every budget, expectations are very high. But this time, I feel our policymakers are trying to find a way to put the economy back on track. As a wealth manager, the foremost thing to watch in this budget is fiscal deficit (the gap between government income and spending).

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Apart from this, from an investor point of view, we can hope for expansion limit of Section 80C and raising of limits for schemes like SCSS (Senior Citizen Savings Scheme) and PMVVY (Pradhan Mantri Vaya Vandana Yojana) so that more pensioners get attracted towards it. For mutual fund investors, they can bring DLSS (debt linked saving scheme), quite similar to ELSS (equity linked savings scheme) so that investors have more options towards the debt part as well.

Also readBudget 2022: Let’s see what it builds for the real estate sector

Which sectors could be in focus in Budget 2022?

It is too early to answer right now. A lot of decisions depend on the policymaker, but historically financial sectors give satisfactory results. If I have to speculate, then maybe agriculture this time will get more benefits due to some past events.

Sectors like auto, banks, NBFCs (non-bank finance companies), fertilisers and cement will be key focus. Investors also have to keep an aerial view on unexposed and little-known speciality chemicals.

Also readBudget 2022: Covid-hit theatre owners seek tax relief, capital support

What is your view on markets for 2022?

For the stock market in 2022, a lot depends on monetary policies of central banks. As a wealth manager, I see rising inflation as a point of concern; so if central banks use their tool to combat inflation, then the stock market is definitely going to get hurt.

Investors have to keep a bird’s eye view on interest rate decisions. The US central bank (the Fed) hinted at rate hikes which is a point of concern for markets. Also, the Fed is dialing back its bond buying programme.

The stock market is famous for its unpredictability. In the last few years it has shattered records. So investors have to keep their asset allocations in equilibrium positions and hedge themselves with cash.

Also readIn Graphic Details: A brief history of government borrowing

The Fed has hinted at three rate hikes in 2022 – how will it impact Indian markets, bonds and currency?

The rate hike decision will impact the global market for sure. I feel after that decision, FIIs (foreign institutional investors) will slowly move from aggressive equities towards safe havens like gold, bond, etc. This may depress the developing stock market of India. But in the long run, the growth story of India is intact and investors can invest in the country. Yes, FPIs (foreign portfolio investors) and FIIs dragging out of equity could weaken the market. But domestic investors can get a bargain due to that. I never bet against Indian growth.

Do you expect the broader market space to outperform benchmarks in 2022?

The year 2021 is quite different from others. Generally, I see a wrestling match between growth versus value stocks; but this time it is small/mid-caps versus market index.

Often, either smallcaps and midcaps have a tendency to outperform the index amid low interest rates. In all-time low rates, they have justified these points. But now the Fed has hinted at raising rates in 2022. So, if rates start increasing then I don’t see small/mid-caps outperforming the index; but that does not mean their potential is limited anyways. Investors have to diversify well with mid-caps and blue-chips.

Which sectors are likely to hog the limelight in 2022?

My favourite sector is FMCG. And as a wealth manager, I think this sector will surely be in the limelight in 2022. The reason behind this is pretty elementary; as rates start increasing or the Fed starts slowing the pace of bond purchasing, many investors and FIIs move towards defensive, consumer-centric and safe-bet equities; for this reason, FMCG is best. So, now it’s a great chance to accumulate the best blue-chip FMCG stocks at bargain prices and later see those growing even in a dull market.

Any stock or sector that could turn out to be a dark horse in 2022?

It is difficult to give any response before policy outcomes and decisions; but I think apart from FMCGs, the stocks which create a monopoly or those stocks which have a competitive advantage and have more than 50-60 percent of market share will be the dark horse of 2022. Stocks like Colgate, HUL, Gillette, and Britannia are available at bargain prices today and they are doing the same business which they were doing 10 years before. So they are predictable in nature. Investors can accumulate such safe and crash-resistance stocks with good dividends and strong fundamentals for the long term to get compounding effect.

What are your views on markets in terms of earnings recovery in 2022, as well as valuations when compared to global markets?

Recoveries in earnings is quite phenomenal and surprising for all investors. But the big question is whether they are sustainable or just liquidity-driven? Time will tell the answer. So we have to wait and watch. As far as valuation is concerned, the best tool to judge any country’s valuation is total market cap over GDP.

Therefore, yes, investors have to invest very carefully only in those blue-chip stocks which are available close to their intrinsic value.

Rational thinkers like me always tell new investors that in the stock market nobody knows when the clock ticks 12 and all things suddenly change into pumpkins and mice. The best way to deal with the stock market is to safeguard your portfolio.

What are your views on IPOs hitting D-Street? Do you think there are general expectations that IPO means quick money? How should investors look at investing in the IPO?

No, I don’t think an IPO is the equivalent of making quick money. Yes, 2020 and 2021 were known for IPOs, but when the rate starts increasing in 2022 and 2023 as well as in 2024, you will suddenly witness a decline in IPOs. The trend of IPOs will go downwards in the coming time. For investors looking for IPOs, they have to select only those which have a big issue size, strong fundamentals, less debt and high cash flows. Investing in sound IPOs for the long term is an ideal way to earn and compound.

Also, in 2020-21 many loss-making IPOs performed strongly and many investors got attracted towards them. But in the coming time Mr Market will surely adjust them based on their fundamentals.

So my advice for long-term investors is that invest in IPOs for 5-10 years with a view to compounding and not just for making quick bucks.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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