- Date : 23/02/2023
- Read: 4 mins
Decoding this year's Budget with mutual fund experts.
Mutual fund managers believe the borrowing was lower than expected, the fiscal deficit, and the growth projection, are all positives for bond and equity markets, despite no direct mutual fund SOPS in this Budget. Let us look at what these five mutual fund managers think of Union Budget 2023.
Aditya Birla Sun Life Mutual Fund, Mahesh Patil, CIO
Patil thinks that this Budget focuses on fiscal consolidation and growth. He believes the 10.5% GDP growth projection is credible, and the fiscal deficit target of 5.9% is aligned with the estimates. However, he thinks the borrowing amount is not aligned and is a little lower than expected. The proposed capital expenditure is at a record high at Rs. 10 lac crores, and the capital gains did not witness any negative surprises. Interestingly, taxpayers got some relief, supporting consumption, and the overall Budget aims at consumption and is pro-investment.
Also Read: What can investors expect from this Budget?
Quantum Mutual Fund, Chirag Mehta, CIO
Mehta believes Capex is a focus of this Budget, and it is good as it's required to ensure cyclical recovery. He believes the Agri push, clean energy (Rs. 35,000 crores), 50 new airports, and railways (2.4 lac crores) will help boost income and employment in the rural economy. His analysis also included comments on affordable housing. Mehta believes that an affordable housing allocation of Rs. 79,000 crores will help the housing market to keep its momentum. Local production incentives like lower duties will help as well. According to his analysis, the focus on capex in this Budget will support inclusive growth and the economy's resilience amidst a global slowdown. Mehta also believes the bond and equity markets have positively responded to this Budget.
Edelweiss MF, Dhawal Dalal, CIO – Fixed Income
Dhawal believes that the Finance Minister has focused on growth with capex and maintained fiscal prudence in this Budget. His analysis suggests that the theme of credibility, consolidation, and continuation has continued. Capex saw an increase of 33% to Rs. 10 trillion for FY24, creating a multiplier effect and supporting additional jobs. He believes the Indian Railways allocation will help modernize the heavy industries and infrastructure. Extending the 50-year loan (interest-free) to States by another year, linking it to capex, will support infrastructure development. Dhawal's analysis also suggests that market participants enjoyed the Budget's conservative estimate without any hidden fine print or negatives. It was a positive Budget for every social stratum. Personal consumption might increase due to broadening the personal tax slabs and the New Tax Regime. Dhawal believes that nominal GDP growth will be 10.5% in FY24, making it credible. Increasing net tax receipts in FY24 suggests tax buoyancy. He added that equity and bond markets sharply rebounded after the Budget announcement, and the net and gross borrowing for the bond market was in the lower market estimate bracket.
Also Read: Key Highlights of Union Budget 2023.
TRUST AMC, Sandeep Bagla- CEO
Sandeep Bagla believes that the borrowing numbers align with the expectations regarding bonds. US yields are much lower than their peaks, and Indian yields also had to go down. He believes the Budget triggered a small rally, being a non-negative event. Sandeep Bagla believes that provident fund and insurance company investment demand will remain strong because of an increasing corpus. He also believes that FPIs can become buyers because real interest rates have become positive. Sandeep Bagla believes that central bankers are not showing any incremental hawkishness and that inflation is under control. Indian bonds can rally by 50-6- bps this year.
SAMCO MF, Umesh Kumar Mehta, CIO
Mehta believes this Budget has done the least for the financial and services sector and the most for Agri. The shift toward the New Tax Regime will reduce interest in financial products like ELSS, insurance premiums, and more.
Managers of several mutual funds are optimistic about this Budget and believe the Budget has rewritten financialization rules for savings in India. It will result in inducing expenditures and not incentivize savings. The bulls will reign in the stock market with a thrust on government capex, no significant borrowings, no massive disinvestment targets, and a controlled fiscal deficit.
Mutual fund managers believe the borrowing was lower than expected, the fiscal deficit, and the growth projection, are all positives for bond and equity markets, despite no direct mutual fund SOPS in this Budget. Let us look at what these five mutual fund managers think of Union Budget 2023.
Aditya Birla Sun Life Mutual Fund, Mahesh Patil, CIO
Patil thinks that this Budget focuses on fiscal consolidation and growth. He believes the 10.5% GDP growth projection is credible, and the fiscal deficit target of 5.9% is aligned with the estimates. However, he thinks the borrowing amount is not aligned and is a little lower than expected. The proposed capital expenditure is at a record high at Rs. 10 lac crores, and the capital gains did not witness any negative surprises. Interestingly, taxpayers got some relief, supporting consumption, and the overall Budget aims at consumption and is pro-investment.
Also Read: What can investors expect from this Budget?
Quantum Mutual Fund, Chirag Mehta, CIO
Mehta believes Capex is a focus of this Budget, and it is good as it's required to ensure cyclical recovery. He believes the Agri push, clean energy (Rs. 35,000 crores), 50 new airports, and railways (2.4 lac crores) will help boost income and employment in the rural economy. His analysis also included comments on affordable housing. Mehta believes that an affordable housing allocation of Rs. 79,000 crores will help the housing market to keep its momentum. Local production incentives like lower duties will help as well. According to his analysis, the focus on capex in this Budget will support inclusive growth and the economy's resilience amidst a global slowdown. Mehta also believes the bond and equity markets have positively responded to this Budget.
Edelweiss MF, Dhawal Dalal, CIO – Fixed Income
Dhawal believes that the Finance Minister has focused on growth with capex and maintained fiscal prudence in this Budget. His analysis suggests that the theme of credibility, consolidation, and continuation has continued. Capex saw an increase of 33% to Rs. 10 trillion for FY24, creating a multiplier effect and supporting additional jobs. He believes the Indian Railways allocation will help modernize the heavy industries and infrastructure. Extending the 50-year loan (interest-free) to States by another year, linking it to capex, will support infrastructure development. Dhawal's analysis also suggests that market participants enjoyed the Budget's conservative estimate without any hidden fine print or negatives. It was a positive Budget for every social stratum. Personal consumption might increase due to broadening the personal tax slabs and the New Tax Regime. Dhawal believes that nominal GDP growth will be 10.5% in FY24, making it credible. Increasing net tax receipts in FY24 suggests tax buoyancy. He added that equity and bond markets sharply rebounded after the Budget announcement, and the net and gross borrowing for the bond market was in the lower market estimate bracket.
Also Read: Key Highlights of Union Budget 2023.
TRUST AMC, Sandeep Bagla- CEO
Sandeep Bagla believes that the borrowing numbers align with the expectations regarding bonds. US yields are much lower than their peaks, and Indian yields also had to go down. He believes the Budget triggered a small rally, being a non-negative event. Sandeep Bagla believes that provident fund and insurance company investment demand will remain strong because of an increasing corpus. He also believes that FPIs can become buyers because real interest rates have become positive. Sandeep Bagla believes that central bankers are not showing any incremental hawkishness and that inflation is under control. Indian bonds can rally by 50-6- bps this year.
SAMCO MF, Umesh Kumar Mehta, CIO
Mehta believes this Budget has done the least for the financial and services sector and the most for Agri. The shift toward the New Tax Regime will reduce interest in financial products like ELSS, insurance premiums, and more.
Managers of several mutual funds are optimistic about this Budget and believe the Budget has rewritten financialization rules for savings in India. It will result in inducing expenditures and not incentivize savings. The bulls will reign in the stock market with a thrust on government capex, no significant borrowings, no massive disinvestment targets, and a controlled fiscal deficit.
