Investors should use the budget as a tool to understand the country's economic direction and build a long-term portfolio as the budget provides insights into macroeconomic trends and government priorities, helping investors make informed decisions.
That's the word coming in from Saurabh Mukherjea, founder and chief investment officer at Marcellus Investment Managers, who believes that making investment decisions based on specific events like the budget can be challenging and unpredictable.
"All event-based investing, whether it's monsoons, budgets, or elections, is inherently risky because you've got a certain take on the event. Making a right call on a specific event, whether it's a monsoon, elections, or a budget, is very tough. So, I urge those watching to use the budget to understand the state of the country," Mukherjea said.
Mukherjea advised investors to build a mental model of the economy before the budget, rather than reacting to short-term developments. He suggested that the budget should be viewed as an occasion to confirm investment strategies, rather than a market-moving event.
He also stressed the importance of reading the Economic Survey and the Budget speech carefully, as they provide valuable insights into macroeconomic trends, government priorities, and fiscal policy direction.
Investment Approach
Mukherjea outlined key investment strategies based on the economic cycle. He said that if the economy is in a downcycle, investors should focus on IT, pharma, and high-quality banks, as these sectors tend to be more resilient.
He noted that the budget may confirm an economic slowdown, further strengthening the case for defensive investments. Additionally, if the government prioritises rural spending, investors should look at agriculture-related sectors such as tractors, fertilisers, and dairy.
Budget Expectations
Mukherjea believes that with limited fiscal space, the government will likely focus on welfare schemes rather than capital expenditure-heavy projects. He pointed out that 80% of Indians earn below Rs 5 lakh and form the main vote bank, making them a key focus in policy decisions.
Additionally, he suggested that investors should consider sectors benefiting from rural spending, as government measures will likely support economic activity in these areas. He highlighted that rural-focused investments could present strong opportunities in the current economic environment.
Watch the full conversation here:
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