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Reading: INVAsset’s Anirudh Garg says budget  2024 may not  have a significant  impact  on  Indian stock  markets  
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INVAsset’s Anirudh Garg says budget  2024 may not  have a significant  impact  on  Indian stock  markets  

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Last updated: 2024/01/09 at 11:43 AM
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 Anirudh Garg, Partner and Fund Manager at INVAsset, PMS, believes  that  Budget 2024  may  not bring  significant  changes  to  the stock market and investors, but any  significant announcement  will  recorded  and considered for  its  potential impact. In an interview with Mint, Garg said  this year’s  market  drivers appear  to be  mainly focused on  political events and economic  policy.  Edited  excerpt:  

 What are your expectations  for  the  2024 budget? Will  it  be a pro-growth or  populist budget ahead of the  2024 general election? Which  budget announcements  will  be important from  a market perspective? Expectations  for the  2024  budget appear  to  hinge on  the belief that it  will not have a significant impact given  its proximity to  an  election year.  

 Instead, the focus is on  analysis of  the  February  2023 budget,  which  prioritizes  capital expenditure (capex) over popular measures  aimed at attracting  voters.  

 Last year’s  budget  allocated  19.5%  of  spending to capital expenditure,  the highest in two decades,  demonstrating  the government’s long-term planning approach. 

  This strategy is  considered  crucial  to  a  country’s  prosperity, as capital investments  generate returns over longer periods of time, unlike short-term, immediate  benefits  from revenue  spending.  

 The argument  goes  that investing in long-term assets,  just  like a family  invests  in a business for future income, is  essential  for a developing  country  like India.  The government’s clear focus on  improving  infrastructure and sectors  such as  roads, railways,  defense  and airports  are  seen as vital  to  India’s growth from  two trillion to  ten  trillion dollars.  

 While the current budget  may  not bring  significant  changes  to  the stock market and investors, any important announcements will still be noted and considered  based on  their potential impact. 

  Most  of  the  active products have been marketed.  What  is  the next  trigger  for the market?  Market  triggers  this year  appear  to be  mainly focused on  political events and economic  policy. First,  the  2024  general elections  and the  current government’s  expected victories  in key Indian states  will  be  priced in  the market.  

 However, the actual  result,  especially the majority  that the  BJP  can  secure  victory,  is  still  expected  to  matter to markets.  

 Additionally, the Federal Reserve’s stance on inflation and interest rates is  considered  a  deciding factor.  

 If the Fed continues to manage inflation effectively, interest rate adjustments may not  have a major  impact  on  the  market.  Conversely, any change in this  position can act  as a trigger.  The US  election scheduled for  later  this  year  is  also expected to  play an important role.

  As  the  political  landscape evolves, the political  changes and economic directives that  accompany a  new  administration  can  cause  market volatility. 

  The advice  emphasizes the  understanding that markets are forward-looking and tend to price in  response to  anticipated outcomes rather than  reacting  to current events.

  Therefore,  the market may  perform better in anticipation of a positive  event  and  may react  less  when that  event occurs. 

  Investors are  advised not to be  swayed by market  price increases  following positive developments and  should  focus on opportunities during  times  of uncertainty or volatility.  The  recommended  strategy  is to  “buy  on  dips,” that is, buy  when prices are low in anticipation of future  profits.  

 This year is expected to be characterized by high volatility due to several  key upcoming events,  suggesting a cautious and strategic  investment approach.  

 Do you  think  the market  will have  similar returns  to  last year?  In 2023,  Nifty 50 witnessed  impressive growth of over  20%, proving  its resilience and potential. Over the past three,  four  and five years, our compound annual growth rate (CAGR) has consistently exceeded  15%.  However,  it is  essential to  acknowledge  that the  Nifty’s long-term  historical  average has  typically  been  between 11  and 13%.  

  Assessing  current market conditions, we believe that the  market is  entering  a high price zone.  This doesn’t  mean  opportunities  to generate  alpha will disappear, but  they  may not reach the  levels  seen  in 2023. 

  For more  information,  visit at https://happenrecently.com/zepto/?amp=1

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