FY24 budget has largely been in line with expectation of the government trying to strike a balance between fiscal
priorities, minimal populistic measures and capex push.
Thus far, the steps taken by the government continue to support growth momentum and focus on bringing down the fiscal deficit. At the same time, giving support to the middle classes is likely to result in a continuation of the growth in a meaningful way. We believe that the Indian markets have not been cheap in terms of valuation, and have been underperforming other markets over the past few months. With a few more months of underperformance, Indian equities will be structurally well positioned for the long term and could present a good long-term investment opportunity. As a fund house, we have been recommending investors to invest systematically into equities, adhere to asset allocation strategies, and invest in debt mutual funds, over the course of this year. Over the past three years, the government has initiated various steps which have been instrumental in creating a level-playing field for debt investments. This has made long-term investing in debt mutual funds very attractive.
If an investor is considering lump sum investment, then it may be better to opt for asset allocation oriented or hybrid category offerings such as the multi-asset, given that equity markets are not cheap. We believe macro investing will be crucial over the coming decade, making categories like business cycle funds crucial. In terms of market capitalisation, on a valuation basis, large caps are better placed than mid cap and midcaps are better placed than small-caps. If one is investing through a Systematic Investment Plan (SIP) with a 3-5-year investment horizon, they can consider investing in aggressive categories like mid cap, flexi cap, value, special situation or small cap to benefit from the potential volatility in these pockets.
To conclude, the budget is a pragmatic and growth-oriented one, which will help India remain amongst fastest-growing economies globally. We are positive on manufacturing, healthcare, financial services and infrastructure as a theme. Both infra and manufacturing are segments which have the potential to create a ripple effect among various other sectors.
The sector(s)/stock(s) mentioned in this article do not constitute any recommendation and ICICI Prudential Mutual Fund may or may not have any future position in this sector(s)/stock(s).
Mutual fund investments are subject to market risks, read all scheme related documents carefully.
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