I had an opportunity to meet a group of market participants and industry representatives at a corporate event this week. The discussions over lunch and tea revolved around the three broader topics – (a) State of equity markets; (b) Expectations for the final Union Budget for FY25; and (c) Corporate performance. Unsurprisingly no one was interested in discussing politics, geopolitics and the US Fed’s policy.
Equity markets
Most people were satisfied with the performance of markets in general and their personal portfolios in particular. Almost everyone believed that the stock prices will continue to rise for the next couple of years at least; though there could be some intermittent corrections. Everyone appeared prepared to invest more money in stocks. The return expectations from equity investments were in high teens on the lower side.
With a few exceptions, most people appeared market cap agnostic in their investment strategy. In fact, the awareness about SME segment stocks surprised me. Both mutual fund and stock folios are well diversified across market cap segments.
Everyone had a story to tell about multi-bagger stocks, especially PSU Banks, Defense, Railways and power sector stocks. Some were proud to own a couple of them since the IPO. Some regretted selling them too early and buying again. Some rued missing this once in a decade opportunity.
Most market participants lamented the losses traders are incurring in the derivative trading. However, none admitted to be trading in derivatives himself/herself.
A significant number of participants claimed a material elevation in their lifestyle due to the gains made from strong market performance. These gains resulted in the form of higher fee/brokerage income and gains. Move to a larger/expensive house and more frequent foreign vacations were too top cited indicators of lifestyle elevation.
Union Budget
None of the participants expected any material change in income-tax rates or rules. It is felt that other than minor tinkering in standard deduction or slab structure, no other change may be made this time. Most expect the fiscal consolidation and focus on infrastructure to continue. No one spoke confidently about “coalition dharma” impacting the budget, but everyone would like to see if it does.
There was enthusiasm about railway and defense allocations. However, most of it appeared to be driven by portfolio positioning rather than any rational explanation.
Corporate performance
The market participants and industry people were most sanguine about the performance of power, telecom, construction and healthcare & pharma sectors. The opinion was divided vertically about the financials, commodities and manufacturing sectors. IT Services and Consumers appear to be carrying least expectations.
Note: This is based on casual discussions with a very small group of people. It may not be close to the real picture. Readers may like to dig deeper and seek views of a larger group. I shall be happy if any reader wants to add or challenge any of these notes.
