Budget 2024: No key announcement expected, says Santosh Singh of Motilal Oswal AMC

Since this is the last Budget before general elections, Santosh Singh, fund manager of Motilal Oswal AMC, doesn't anticipate a multitude of significant announcements to be made.

Apart from his expectations from the interim Budget and government's focus on manufacturing and development, he deconstructs the stupendous spike shown by the market and its likely reasons.

Among many positive things likely to happen next year, the IT sector is expected to beat the expectations, says Santosh Singh in an email interview with Mint. 

He also asserts that the market has already factored in a majority government being elected in the forthcoming elections, as a result of which, the market is likely to stay range bound. 

To lay investors, he therefore advises to stay committed to long term financial goals without getting influenced by the short-term movement.

Edited Excerpts:

As a fund manager, what are your expectations from the interim Budget? What do you think would cheer up investors a couple of months before the Lok Sabha polls are scheduled to take place?

Given this budget 2024 would be a partial one, given it’s the last one before the budget, I don't anticipate a multitude of significant announcements. However, I would focus on the commentary and the intent in the budget. 

I would expect that to take forward the focus the government has shown on capex, manufacturing and development. I think if the government is able to show policy consistency, it would help the market to take a view for the future.

Can you share some insight on the upward trajectory that the market indices have witnessed? Is the trend likely to continue next year? 

Upward trajectory in the market has been driven by a) better growth in the economy b) US macros seems to be turning out better with an end in the interest rate increase c) Clarity on the political situation. I would expect next year to be moderate compared to the current year as the valuations are getting a bit higher and a lot of positives on the macro side are already getting priced in

Which are the best performing sectors of the year gone by i.e., 2023? Do you think this performance will continue in the next year too?

Last year, manufacturing, capital goods, autos, energy, and public sector undertakings (PSUs) stood out as some of the top-performing sectors. I anticipate that capital goods will continue to perform well, considering the ongoing government focus in this area

What are your expectations from the forthcoming year? Are there any specific sectors that you believe would beat expectations?

I anticipate a moderate year ahead, taking into account that numerous positive factors have already been factored into valuations. Despite this, given my expectation that interest rates have peaked, I believe the information technology (IT) sector could exceed most expectations.

What impact, do you think, general elections will have on broader indices in the immediate future? 

The market has already priced in the expectation of a significant majority for the current government. Consequently, a substantial victory for the current government would align with these expectations. I foresee the broader indices staying within a range due to prevailing valuations.

What investing advice would you give to the retail investors? 

We believe in long-term investing without getting impacted by short-term movements. Any investor can only control the input i.e. finding high EPS growth companies with good governance at a reasonable price. 

Hence one should not get too conscious of the short-term movement in the stock price if the fundamentals are intact. Significant gains are achieved through investing in quality companies and maintaining a steadfast commitment to staying invested, emphasising the importance of long-term commitment over frequent trading.