Union Budget 2022: Georg Heber Joseph, CEO and Chief Investment Officer of ITI Mutual Fund, in a conversation with Moneycontrol, while answering questions related to the upcoming union budget, the further movement of the market and the economy, said that in the Union Budget 2022, the government’s plan The focus will remain on pushing the economy and relief measures, which will further benefit the companies associated with the infra sector. Keeping this in mind, before the budget, focus should be on such companies which are associated with infrastructure.
In this conversation with Moneycontrol, he further said that there will be an increase in the earnings of the companies going forward. In the last decade, we have seen a growth of 6 per cent year-on-year in earnings of companies, whereas in the last few quarters we have seen a growth of 20 per cent on a yearly basis. Which clearly indicates that in the coming years, the earnings of companies can see an average growth of 15-20 percent on an annual basis.
What’s the weather like for the third quarter? On this, he said that during this period still we may see pressure on margins of many sectors due to base effect and increase in raw material prices on a yearly basis. He further said in this conversation that we should look at the third quarter results on the basis of stocks, not on the basis of sector. The IT sector may perform well during this period, but it should also be noted that their valuations so far have become very expensive.
He further said that some big banks and IT companies may be seen upgrading. Apart from this, companies related to industrial capital goods, engineering and infra may also perform well. After nearly a decade, we are seeing a recovery in the capex cycle, which will benefit the companies associated with these sectors.
Talking about the possibilities related to the upcoming Union Budget, he said that the government’s focus in the budget will remain on infra. There may be a provision of tax exemption for the infra sector. Apart from this, the decision taken by the government on issues like sale of government land, reducing the government’s stake in PSU companies and bringing it below 50 percent will also be watched by all.
He said the government’s focus on infra in the budget would benefit companies dealing with capital goods, engineering industrial products, construction and real estate.
Talking on the market, he said that we can see a lot of volatility in the next 6 months. News like tightening of monetary policies by all central banks, increase in interest rates will show their effect on the market. Apart from this, budget and state elections are some such events in the domestic market which will be seen to have an impact on the market. In such a situation, the best way to invest in the market would be to invest in equity funds through SIP with a long-term perspective.
He further said that sectors related to real estate, banks, commodities and infrastructure have not played any major part in the market in the last 10 years, but now they seem to be starting a bullish phase. There are indications that going forward we can see a growth of 15-20% on a yearly basis in the market and small-medium stocks will also contribute a lot to this growth. Looking from the perspective of the next 3 years, we will see the market performing very well.