00:00Namaskar! My name is Digvijay Singh. Welcome to Good Returns.
00:10We welcome you to our special series on Budget, Future Focus Budget 2025.
00:16In this episode, we will talk about Shihar Bazaar.
00:19The experts joining us for this discussion are
00:23SEBI-registered investment advisor firm Tejimandi's Vice President of Research, Raj Vyas.
00:30Tejimandi is the subsidiary of the country's biggest broking firm, Motilal Oswal Financial Services.
00:38Raj, welcome to our special program.
00:42Thank you for having me on your show.
00:44Sir, first of all, there are two big triggers, the earning season and the budget.
00:49The earning season has started with the TCS results.
00:52Let me start with the earning season.
00:57How are you looking at the TCS results and Q3 earnings for the bazaar?
01:02TCS has delivered a good growth in the December quarters.
01:10If we look at the revenue, margins, and profitability,
01:15they were all in-line as per consensus estimates.
01:19The driving point of the growth was the consumer business group which increased by 1.1%.
01:28The energy segment also increased.
01:31If we look at the regional markets and geographies,
01:35every parameter was green-ticked as it delivered well.
01:40If we look at the TCV, the total contact value, which is a very important parameter,
01:46it was around $10.2 billion.
01:52In Q2, it was only $8.6 billion.
01:55We can see that the new contact orders are also starting to reach them.
02:02This is a good news for the company and across sectors.
02:08The point of attrition rate, which we track in IT services,
02:13is also below 30%.
02:16It delivers very well.
02:20If we talk about the US elections,
02:25if we look at the last 7 out of 8 elections,
02:29every 7 times, the IT sector has outperformed the benchmark.
02:37Trump's office is going to resume on 20th January.
02:43He has shown a cool-off on the H1B1 visa, which is very important for IT companies.
02:52The majority of Indian IT firms' revenue comes from the US and European countries.
02:58He has taken a very positive stance.
03:03His economy is growing.
03:07It is stable.
03:08These are the parameters that deliver positive momentum to the sector and the company.
03:16We are very positive as an IT sector as a whole.
03:19Is there any other sector other than IT that is in focus for Q3,
03:25which you can suggest to keep an eye on?
03:30Apart from IT, we like the industrial sector.
03:37It caters to the entire economy.
03:40If we talk about a developed country,
03:43you have to grow the economy.
03:47When there is economic growth, the manufacturing sector will grow.
03:54According to the macro data points, we are very positive in the industrial sector.
04:02If we talk about the company, we have taken the GN India fund.
04:09It also caters to the industrial sector.
04:13If you look at the financials and management outlook,
04:18the sector and company outlook is very good.
04:22Apart from IT, we are focusing on the industrial sector.
04:28Sir, if we look at the overall share market,
04:31we saw a correction in November and December.
04:36Now, there is a lot of volatility.
04:39What is the reason for this?
04:42There is a lot of ups and downs.
04:45What is the reason for this?
04:46How long will this continue?
04:48Will the market be in this mood till the budget?
04:52If we check the history record of 15 days before the budget,
04:56in the last 5 budgets, the average performance was negative.
05:00It was minus 3%.
05:01In July 2024, we saw a positive return in the budget.
05:10If we talk about volatility,
05:16if we look at the performance after 15 days of the announcement of the budget,
05:22the average of the budget has been positive at 2.3%.
05:2615 days before the budget, there is a lot of volatility.
05:29There is a lot of news that there may be a reduction in taxes.
05:33This sector may get a boost.
05:35For all these reasons, the volatility increases.
05:38If we look at the performance after 15 days of the announcement of the budget,
05:42in the last 5 budgets, it has been positive.
05:46If we look at why the market is correcting,
05:50there are 3-4 big things.
05:52There is a battle between domestic liquidity,
05:56valuations, global headwinds,
06:00and the outflow of FIIs in the Indian market.
06:04We have seen the history of such deep corrections.
06:10We got an interesting data point that every 2 years,
06:14there is a correction of 10% or more in Nifty.
06:18If we look at the reasons,
06:22there was a reason for the Brexit referendum.
06:25In 2018, there was an ILFS crisis.
06:28In 2020, it was due to COVID.
06:31In 2022, the Russian-Ukrainian war impacted the global markets.
06:36In 2024, there was an outflow of FIIs.
06:42Due to this reason, the market has been impacted.
06:45In short, whatever the reason,
06:50the market has its own way of flushing out weak hands.
06:56It is important to see how the market performs after deep corrections.
07:04After such corrections,
07:09the market has made new highs in the last 12-15 months.
07:14The market has also touched new levels over the period.
07:20This is a positive thing.
07:22There is a correction of 10% or more.
07:25Nifty and benchmark indices should grow from here.
07:31What is the mood of the market in the upcoming budget?
07:38What direction can the market go?
07:41Especially, when we hit the budget in February.
07:44We have done an analysis of the month before the budget.
07:51How does it perform?
07:54If we look at the last 10 years,
07:57Nifty has given a return of between 0.1% and 0.3%.
08:06This is due to the budget and quarterly earnings.
08:13This helps the market to grasp both.
08:17It focuses on the budget and quarterly earnings.
08:23What will be the growth trajectory?
08:25These are the reasons.
08:27As you said, the market is volatile.
08:31We have seen the volatility index.
08:34During this period,
08:36India's volatility index has seen a minimum increase of 7%.
08:43We expect that volatility will remain in the market till the budget comes.
08:51This is due to the quarterly earnings and news flows.
08:55When the budget is coming,
08:59In which sector are you focusing?
09:02In the earning season, IT and industrial have become.
09:05When the budget is coming,
09:07There are many expectations related to the budget.
09:09In which sector are you focusing?
09:11Where are you looking?
09:12You can tell our viewers.
09:14If we look at the impact of the budget,
09:18We don't speculate on the budget.
09:20Because there is no use of it.
09:22If we speculate on the budget,
09:26We get to see the short-term impact.
09:31For the next 3-4 days.
09:34After that, the market focuses on earnings, growth, and fundamentals.
09:41It forgets about the budget.
09:45If we look at the upcoming budget and sector-specific,
09:52We are focusing on sectors like railways, agriculture, infrastructure, and renewables.
10:00Our focus is on railways.
10:03Because the government is focusing on modernization, safety upgrades,
10:09Like coverage, network expansion, and electrification.
10:12They want to work.
10:14And they have already worked.
10:16If we look at the last July budget,
10:19The railway budget allocation was around 2.60 lakh crores.
10:28It will be interesting to see if this will come in the budget or not.
10:34Last July's budget allocation increased a lot.
10:45This sector provides productivity and resilience.
10:49Infrastructure is a big sector.
10:56It covers 3.3% of India's GDP.
11:03This is India's vision to become a rich country.
11:10The government did not make any changes to the last July budget.
11:18It was around 11.11 lakh crores.
11:21If we look at the data till November,
11:24They have utilized only 46.2% of the capex.
11:29They will have to utilize the remaining percentage in a fast pace.
11:37We believe that 11.11 lakh crores cannot be fully utilized in FY25.
11:44They will have to work hard.
11:48Our focus is on infrastructure.
11:55If we look at the last revised estimates,
12:02The defence budget decreased by 0.3%.
12:05It was around 6.21 lakh crores.
12:08Recently, the defence minister, Rajnath Singh,
12:13Approached with optimism that FY25 will be significant for the defence sector.
12:22Recently, he talked about exporting 50,000 crores of defence equipment in FY2029.
12:33This is a significant goal.
12:38The budget will also be important.
12:41This will be the first budget of the Modi government.
12:45This will be a roadmap for the government.
12:52We will get to see a lot of improvements.
12:56Sir, we are looking at the railway, defence, and infrastructure sectors.
12:59One thing that we should discuss is
13:02Will the government be aggressive in the investment of Vinivesh?
13:09What is your opinion on this?
13:11The government focuses on divestment in every budget.
13:15But it cannot be fulfilled for some reasons.
13:18Our focus is not to focus on divestment.
13:22Government is talking about privatization in other sectors.
13:26So that jobs can get creativity boost.
13:30Private players can contribute.
13:34Our focus is not on divestment.
13:39That is also a speculation.
13:42It will not happen.
13:44It will impact for some time.
13:46Then we will go back to funds.
13:48We are not focusing on divestment.
13:51The GDP growth is being discussed.
13:54It is coming down.
13:56There is a muted estimate.
13:57FY25 has a 6.8 max.
14:00What is your opinion on this?
14:02What can the government do to boost it?
14:04What can it do to increase its speed?
14:06What is your opinion on this?
14:08To boost the GDP,
14:10Taxation in the hands of the individual is high.
14:19Inflation has also increased.
14:21Consumption power is not increasing.
14:26If you look at crude oil,
14:31It is around $77.
14:34We have not seen a reduction in their excise.
14:40Government's capex plan was around 11 lakh crores.
14:46They have utilized 46-48% till November.
14:50This could be due to general elections,
14:56State elections,
14:59Delhi, Uttar Pradesh,
15:03State elections,
15:06Government's capex plan was not as good as it should have been.
15:13Government's capex plan will help the industry grow.
15:22This will have a correlation with the overall GDP growth.
15:28The 6.5% and 7.8% of FY25's GDP growth.
15:36This project is very important.
15:41Government's plans will tell us a lot about the future growth.
15:49In the last 2-3 years,
15:51India's GDP has outperformed the developing countries.
15:58This year will also outperform.
16:00This is an internal thing.
16:02Once it improves, the GDP will improve.
16:05Last question.
16:07Are you expecting a big announcement in the coming budget?
16:14There is a lot of news about taxation.
16:21Are you expecting a big announcement?
16:26Our focus is to keep the budget tight.
16:34Especially in the sectors like infrastructure,
16:38manufacturing,
16:40and the PLI schemes announced by the government.
16:46We are focusing on these sectors.
16:50If we look at the relief,
16:54In the last few days,
16:56we saw that the government will forgive the income tax slab of 15 lakhs.
17:03Now there is news that it will be around 10 lakhs.
17:06The income tax relief is very good.
17:12Because the middle class,
17:15where a large percentage of the population belongs to,
17:20if the income tax relief is done,
17:23the cash in their hands will be saved.
17:27Due to this, their consumption power will increase.
17:31As the consumption power increases,
17:33the FMCG sectors,
17:35or consumer discretionary,
17:37where we have not seen it,
17:40and their direct impact on stock prices,
17:44there will be a positive turnaround.
17:49This will pick up growth.
17:53As you have talked about GDP,
17:56across industries,
17:58across geographies,
18:00if the consumption power increases,
18:04there should be a reduction in inflation.
18:06We should not be on the stance of the RBI,
18:11that it will cut the interest rate,
18:13then the cash power will be on inflation.
18:17The government should also focus on this.
18:20By doing all this,
18:22the GDP growth and consumption trend will pick up.
18:26We have discussed this on inflation.
18:28This is another point.
18:30Secondly,
18:32to make India developed,
18:36the manufacturing hub,
18:38the government was also focusing on this.
18:41The deadline for manufacturing companies,
18:44to set up their plants,
18:47is around 15%.
18:49Their deadline is around 2024.
18:54If this deadline is extended,
18:57it will boost innovation.
19:02It will also help in job creation.
19:04We have seen,
19:07the employment related government,
19:11they need skilled labourers.
19:14They need skilled labourers,
19:18so that they can get a job easily.
19:21If they get a job,
19:25their income earning will increase.
19:28Taxation slabs will be reduced.
19:30This will be beneficial.
19:32This is what we are focusing on.
19:34Overall,
19:35there are two major events for the market.
19:38The first is the earnings season.
19:40The second is the budget.
19:41Raj Vyas is saying,
19:43you can focus on the IT and industrial sectors.
19:46The market will be in volatility for the short term.
19:50We should focus on the CapEx related sectors.
19:55Raj Vyas, thank you for joining us.
19:57Thank you so much.
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