One can expect fair amount of aid and relief to priority, core sectors

CapitalVia Global Research Limited, a pure-play financial market research and consulting company, was established in 2006. The objective of the company is to offer unbiased technical analysis to the trading community. "We suggest investors to go with defensives like FMCG, IT and pharmacy as there is a good amount of skepticism about the forthcoming days and the post-Budget period," Rohit Gadia, Chief Investment Officer of CapitalVia Global Research Limited, tells Bizz Buzz

What are your expectations from Budget 2021, and how will it affect the market?

The present scenario calls for a Budget that is inclusive, stimulating and growth-oriented. The prolonged lockdown in 2020 has taken its toll on the GDP and plunged the economy into technical recession (2 successive quarters of negative growth rate). The street seems to be gauging the upcoming Budget in line with the stimulus packages announced in the last calendar year. One can expect a fair amount of aid and relief to the priority and core sectors. Along with it, banking sector must also be taken care of as the effect of moratorium will be evident in the upcoming days. NPAs may prove to be a problem again, and therefore, this issue must also be considered. Many sectors like media, hospitality and tourism, which are worst affected from Covid-19, are expecting certain specific measures to help them tide the impact of Covid-19.

The Budget has always had an impact on the markets either long-term or short-term, but the upcoming Budget will be a crucial one with the humongous hopes of the investors and common people alike. If the Budget is not as perceived, then the market may correct itself significantly.

There are a lot of uncertainties in the market. What according to you is the possible cause (decrease in gold price and crude prices)?

The uncertainties in the markets are mostly due to two major reasons. First, the rallying dollar, which has inverse relation with gold, prices along with recovery in the US bond yields. Second, the worry over fuel demand due to the surge of the virus and the new strain discovered has been hammering the crude prices.

Do you think that the market can reach 50K anytime soon? Is the upcoming Budget announcement driving the rally in the market?

Sensex is quite close to the 50K-mark and it seems that the level may be reached within a couple of sessions. The abundant liquidity and consistent FII inflows are some of the reasons for the one-way show so far. Another important reason is the Budget 2021 and positive expectations from it. All of these taken together are driving the rally without any halt whatsoever.

How are you viewing different sectors, considering all the factors and market conditions?

The realty sector seems to be getting back on its feet as there is a great interest now in this sector because of its reasonable valuations; the liberal monetary policy has also ensured cheaper credit thereby further enhancing the prospects. The infrastructure sector is also bracing with the revival of all the pending projects allied sectors like cement and metal are also recovering owing to this.

The prospects of the banking sector look quite gloomy as of now as the effects of moratorium and NPAs quantum is still unknown. The hospitality sector is the worst-hit and unless there is any significant relief measure in the Budget the prospects of this segment is still dicey.

What CapitalVia suggests the investors at this point of time?

We would suggest investors to go with defensives like FMCG, IT and pharmacy as there is good amount of skepticism about the forthcoming days and the post-Budget period. If the Budget turns out to be in line with the investor's aspirations, then even banking and NBFC stocks can also be looked at. However, if the Budget is not in line with the expectations, we may see significant correction in high beta stocks.

Any new plans or strategies that CapitalVia is adapting for the retail investors?

We are planning to churn our clients' portfolios in accordance to our view in proper proportions and stay defensive for a while and take appropriate decision post-Budget, meanwhile we are also eyeing for opportunities for value-buying compatible with our overall strategy.