What stocks to go for when it comes to Budget play? Pankaj Murarka answers

“We like the larger banks – be it HDFC Bank or Axis Bank or ICICI Bank. In fact within the PSU banks we are a big holder of SBI and we think all of these banks are in a very fine shape. When it comes to auto, we like Tata Motors and Maruti. Both the PV cycle and the commercial vehicle (CV) cycles are on a strong growth trend and the underlying demand will continue to remain strong. We like telecom as a sector within which we have ownership across Reliance and Bharti Airtel, says Pankaj Murarka, CIO, Renaissance Investment Managers

What can the Budget really do because we are now very interestingly poised for a bit of a bounce as well? Do you see that as the most likely scenario and which sector would you want to prefer when it comes to the Budget play?
Coming to the Budget, my expectations from the honourable minister would be to be extremely ambitious in setting up growth targets for India because we are in an environment where there is growth scarcity. 60% of global GDP is on the brink of a recession and probably India is in an oasis and the only outlier large economy in the world.

In that context, given that the stars are clearly aligned for India and we have so much going right for us, it is very important that the government does all that is required to accelerate our growth curve. I have seen some news reports where the honourable minister made a claim that so far the government has allocated about $24 million to PLI and just the government’s revenue collection out of mobile manufacturing through direct and indirect taxes that will happen by virtue of this PLI will accrue the government $25 million of revenue!

If that is the case and if we have got a policy which can accelerate growth and give impetus to manufacturing, I would expect the government to double down on that because it is working right for us. I think that the government focus will be on growth and accelerating India's growth and in that context all the domestic oriented sectors – be it autos, logistic, rail – will be big beneficiaries because they are the core or heart of the Indian economy and banks obviously are indirect beneficiary because if the economy does well, than the banks should do well. So I would be looking at investing into all of these sectors.

On Friday, we saw a fair bit of selloff in a lot of consumer discretionary names as well as some of the names across telecoms and other sectors. I would think that this is a good time to buy into some of these names for investors wanting to play the Budget or probably look at slightly more medium term beyond the Budget.

You talked about banking, FMCG sectors doing better but can you give us specific names because we are spoilt for choice? Which are the top picks?
A small caveat here. Obviously we have holdings across a lot of these names including some of them which I might talk about. We like the larger banks – be it HDFC Bank or Axis Bank or ICICI Bank. In fact within the PSU banks we are a big holder of SBI and we think all of these banks are in a very fine shape.

In fact, among the top banks in India, these large five-six banks have never been in such a great shape in the last 10 years that we see them today. And given that the Indian economy is still very robust and the growth outlook continues to remain strong, there is a compelling investing case for these banks because from a valuation perspective, these banks are still very reasonable and the growth outlook is very strong. We like all of these names.

When it comes to auto, we like Tata Motors and Maruti. Both the PV cycle and the commercial vehicle (CV) cycles are on a strong growth trend and the underlying demand will continue to remain strong. We like telecom as a sector within which we have ownership across Reliance and Bharti Airtel and I think that India's telecom story or the digital transformation story is very compelling and it is a very long term story. The digital transformation is riding on the back of the telecom companies. So that becomes a very strong growth story over the next 5-10-15 years. so we like all of these names.