Last Updated on Feb 8, 2022 by Aradhana Gotur

Budget 2022 has been announced and it looks like the government is in for the long term game. The budget looks to help everyone, especially the poor and the backward sections of society. This budget focuses on four different parameters of development such as inclusive development, productivity enhancement, energy transition and climate action. The effective capital expenditure of the central government is estimated to be at Rs. 10.68 lakh cr. in 2022-23 making up 4.1% of the GDP.

Let us take a look at what some of the best smallcase managers have to say about the newly announced budget.

But before that, if you are not familiar with smallcases, here’s a brief on these new-age financial instruments. smallcases are model portfolios of stocks/ETFs based on a theme, idea or strategy. It is a modern investment instrument for investors to build long term diversified portfolios. These are created by SEBI registered professionals. smallcases have brought a lot of flavour to investing as they are created across various strategies, market segments, sectors and risk profiles.

1. Sonam Srivastava, Founder, Wright Research

This is a Capex-boosting budget, which is prudent in other expenditures as the Finance Minister (FM) looks to contain the fiscal spending while enhancing growth. As expected in the election year, there is an increased focus on welfare schemes and agriculture. However, for India to keep up cyclical recovery, the government needs to focus on infrastructure. The FM has increased the Capex investment target by 20% to 7.5 lakh cr. and announced critical investments and policies for infrastructure development via railways, metro systems, highways primarily through the PM Gati Shakti initiative. Railway and Logistics linked stocks, Capital Goods, Cement, and Real Estate will gain with this.

FM has focused on Fintech instead of Banking, Electric Vehicles instead of Autos, and Edtech instead of Education which has brought back focus to the new-age innovative sectors. Moreover, FM has kept an increasing focus on digitization, leading to gain for the platform companies and fintechs. FM has also given some relief to the pandemic hit hospitality sector. The budget has tried to contain crypto investments by increasing taxation.

The budget also announced healthcare, education, banking, and urban & rural development policies to decrease compliance burden through digitization and increase education and skilling. Check out the smallcase created by Wright Research.

Wright ⚡️ Momentum smallcase by Wright Research

2. Divam Sharma, Founder and CEO, Green Portfolio

Budget 2022 is clearly focused on the long-term growth of the Indian economy with a thrust on capex, infrastructure, sustainability, clean energy, technology, skill development and job creation. Reducing the current account deficit and attracting capex and investments will be a huge positive for the Indian economy, which is positioning itself as a contender for China Plus One. FM has struck all the right cords considering inflation and lack of fiscal room for the Government in this budget. This budget is a huge positive for the markets as there were no negative surprises and is going to ensure continuity of attractiveness of the Indian economy for the FPI.

High Quality Right Price smallcase by Green Portfolio

3. Vaibhav Agrawal, Chief Investment Officer, Teji Mandi

With capex target of 7.5 lakh cr., and incentives and announcements across several different industries, the government is clearly looking to revive growth in the economy. The government is also focusing on giving achievable numbers and making the budget more transparent. Sectors likely to benefit would be banking, infrastructure facing, and manufacturing exports.

Multiplier smallcase by Teji Mandi

4. Abhay Agarwal, Managing Director, CIO, Piper Serica

There are some clear winners from the budget. The big infrastructure push will require large scale project financing. This will benefit large banks like HDFC Bank, SBI, ICICI, and others that have the balance sheet and expertise to finance large projects. Capital goods, infrastructure, and cement companies will also benefit like Ultratech, L&T, ABB, and Thermax.

With a strong focus on housing, large and small housing finance companies like HDFC, Canfin, and others should see an uptick in business. There is clear support to use of technology for providing education and healthcare services. So large tech-based incumbent players like Apollo Hospital and Info Edge should see faster adaption. Biofuel companies have also benefitted with imposition of extra Rs. 2 excise on unblended fuel. This is positive for companies like Globus and Praj. We believe that small banks will benefit from the extension of the ELCGS scheme since they cover the MSME lending space. The PLI applicants especially in the electronics space like Dixon and Amber are quite obvious beneficiaries. Overall, a positive budget for the entire corporate sector.

Emerging Dominators plus (ED+) by Piper Serica smallcase by Piper Serica

5. Abhishek Banerjee, Founder, LotusDew

With the introduction of official digital currency, we may see a gradual windup of physical currency, which will have a long term impact on lowering informal economy inflation. This will have a direct impact on housing. An example stock we are researching is Aptus Value Housing Financing (APTUS) where outlay for housing by the government and ebills for central procurement can enhance the availability of commodities for housing and infrastructure.

Listed Venture Capital smallcase by Lotusdew Wealth

6. Varinder Bansal, Founder, Omkara Capital

Boring is good-(no major tinkering has been done to the budget

  • No tinkering
  • No loose talks
  • No free give away 
  • No anti-rich taxes at all
  • Focus on capex/manufacturing (2.9% of GDP highest ever)
  • Subdued assumptions on revenues + cut in other non-capex expenditure

Omkara Opportunities Smallcase smallcase by Omkara Capital

7. Salonee Sanghvi, Founder, My Wealth Guide

It’s a very forward-looking budget. There is a huge focus on capital expenditure which will fire the growth engines. Estimated at 2.9% of GDP it’s among the highest allocation. There is also a huge thrust on moving India into the new century, pushing the digital economy across different industries like real estate, education, health, travel, banking and telecom. The large focus on domestic manufacturing will also aid employment. I see Technology, Infrastructure, and Chemical companies to be large beneficiaries.

MWG Smart Alpha (Fixed) smallcase by My Wealth Guide

Aradhana Gotur
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