Union Budget 2022: Talking on the future movement of the market, direction, economy of the country and the upcoming budget Joseph Thomas of Emkay Wealth Management told Moneycontrol that budget is often considered as a major trigger for market volatility. If the market finds the budget proposals and estimates correct, then it will have a positive effect. It has an effect on the stock market, how much the budget proposals will affect the companies and what are the provisions which can see the earnings of companies going up.
Joseph Thomas believes that in the upcoming Union Budget 2022-23 on February 1, retail housing can get relief news. Housing is a basic necessity. This requirement of a large population of the country is yet to be fulfilled. There has been a lot of emphasis on housing in the last few budgets. In the coming years, the government can take some new steps to increase the implementation and effectiveness of its schemes related to housing.
When asked whether the budget would be dominated by populist tone in view of the upcoming elections in the states or would it be growth oriented, he said that it is very difficult to differentiate between populist and growth oriented budget. Generally in India, both are included in the Union Budget and the State Budget. The populist budget would normally have meant that the common man would get immediate relief on tax and savings rates. On the other hand, a growth-oriented budget means that the long-term benefits accrue to all parties.
In this conversation, he said that the tax exemption given to companies comes in this category. I would like to say that the focus has been on social development since the last few budgets. Which benefits the whole society. Whenever elections are held, government spending on the social sector increases. So at the time of election, we may see this happening in this budget. In this budget, the government can be seen striking a balance between both long and short term growth.
He further said that in this budget, the government may be seen expanding the PLI scheme to promote local manufacturing. Apart from this, the view of the government on disinvestment will also be monitored. The disinvestment policy of the government often seems to be derailed. This is a matter of concern. LIC’s IPO may come soon and the government will keep an eye on how fast the disinvestment plans have not materialized in 2021. Apart from this, the view of the government regarding fiscal consolidation will be watched by both domestic and foreign investors.
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When asked whether the market can give double digit returns in 2022 and will Nifty close above 21000 in 2022? Then he said that in the last two years, investors have got unexpected returns from the market so far and such returns are not always available. In the long run, returns return to normalcy. In such a situation, investors should not set too high expectations. In the next year 2022, we are expecting a return of 15-20%. We must keep in mind that with the normalization of post-Covid conditions, central banks will now try to control rising inflation and heavy liquidity, due to which we will see interest rates rising around the world. In such a situation, correction in the market is natural and we should be ready for it.
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