Budget 2024: Focus on fiscal consolidation for long-term economic stability, expects Sonam Srivastava of Wright Research

With the interim budget less than a month away, investors are quite overwhelmed due to the consecutive events, ongoing activity in the primary and secondary markets, and the macroeconomic environment. With two budget sessions, a crucial national election, and an upcoming US election, 2024 looks like a busy year. Sonam Srivastava, Founder and Fund Manager at Wright Research, discusses a wide range of topics in a recent interview with Mint, including the Q3 FY24 earnings season, foreign investor inflows, the interim budget, and the key growth drivers of 2024.

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According to Srivastava, the banking and finance, renewable energy, infrastructure, and agriculture sectors are expected to be prioritised during the interim budget. Let us quickly look at Srivastava's perspective on these various themes. Edited excerpts:

1. What are your views on the current markets? What will 2024's growth drivers be?

The current market rally is underpinned by India's robust economic fundamentals and positive corporate earnings, buoyed by government initiatives like increased capital expenditure. However, concerns about high valuations and global uncertainties remain. For 2024, key growth drivers include domestic consumption, bolstered by rising rural incomes and government welfare schemes, and infrastructure spending, particularly in railways, roads, and renewable energy. Additionally, a weaker rupee and global trade recovery could benefit export-oriented sectors, while increased digitisation and automation are likely to propel the information technology (IT) sector.

2. Foreign investor inflows have resumed. Will foreign funds still be drawn to India in 2024 for equity investments? What potential risks could be at play?

Foreign investor inflows have resumed, drawn by India's strong growth potential and relatively attractive valuations. In 2024, this trend could continue, but it hinges on several factors. Global liquidity conditions, tightening monetary policies, and geopolitical risks could influence capital flows. Domestically, inflationary pressures and political uncertainty, especially with upcoming elections, could pose risks. Investors should monitor these factors closely, as they could impact market dynamics and foreign fund movements.

3. The Vote on Account—Interim Budget 2024—is the next major event that investors look forward to. What do you hope to see this time around in the budget?

The upcoming Vote on Account—Interim Budget 2024 is a pivotal event for investors. Key expectations include a continued focus on fiscal consolidation to maintain investor confidence and long-term economic stability. Support for critical sectors like infrastructure, agriculture, and healthcare is anticipated to boost these areas and create jobs. Additionally, measures to address inflation and rationalise tax policies could stimulate investments and incentivize businesses, setting a positive tone for the year.

4. Which sectors are going to stay in the spotlight during the interim 2024 budget?

During the interim budget, sectors likely to be in focus include infrastructure, agriculture, banking and finance, and renewable energy. Infrastructure-related companies, particularly in construction, cement, and steel, could benefit from increased government spending. Agriculture initiatives might uplift related companies, while public sector banks could gain from government projects. The focus on green energy could also benefit renewable energy companies, aligning with global environmental goals.

Also Read: Interim Budget 2024: Announcements may feature measures with mass appeal, says Anuj Bajpai of Liquide

5. In 2024, what strategy should investors take when choosing stocks? Could the market overwhelm investors given the impending events, which include two budget sessions, a crucial election in our nation, and an election in the US?

In 2024, investors should adopt a cautious and diversified approach. Given the impending events like budget sessions and crucial elections in India and the US, the market could experience volatility. Investors should focus on companies with strong fundamentals and long-term growth potential. Researching individual stocks, maintaining asset allocation based on risk appetite, and not getting swayed by short-term market movements are crucial. Consulting a financial advisor for personalised investment recommendations could also be beneficial.

6. Which significant sectors should we steer clear of and keep an eye out for in 2024?

Investors should be cautious about sectors heavily reliant on global demand, such as metals and exports, which could be vulnerable to a global economic slowdown. Highly leveraged companies and industries facing regulatory hurdles should also be approached with caution. Sectors to watch include green energy, technology, and healthcare, which are likely to benefit from government initiatives and market trends.

7. What do you expect from the forthcoming Q3 FY24 earnings season? Which sectors are you positive about?

The Q3 FY24 earnings season is expected to present mixed results. Sectors like IT, healthcare, and consumer staples might perform well, benefiting from strong fundamentals and market trends. However, sectors reliant on discretionary spending and exports could face challenges due to global economic conditions. Individual company performance will depend on their ability to navigate macroeconomic headwinds and sector-specific factors.

Also Read: Budget 2024 may not impact the Indian stock market significantly, says Anirudh Garg of INVAsset

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.