Budget 2023: ‘Expect it to be empowering for investors, equipping for economy’

According to him, sectors to look out for ahead of Budget 2023 are energy, healthcare and pharma, speciality chemicals, technology and manufacturing.

Edited excerpts:

1. Given the predictions of a mild recession, what is your outlook for the market? Any levels you are looking at, for Nifty, Sensex?

We do not see the global economy at imminent risk of sliding into recession in early 2023. The financial conditions drag is being cushioned by a fading of supply chain and commodity price shocks. The sharp drop in inflation is helping the world economy grow, so a recession is not likely to happen soon.

Unlike the last year when we saw a bull run before a correction, we can expect the equity markets to be volatile. There are exciting opportunities in Commodity and Currency Markets with Gold & Silver shinning brighter and Natural Gas at a 52 week low.

2. Is IT sector an opportunity now or there is more pain expected?

Instead of focussing on IT Sector in general, it would be good to focus on technology. Artificial intelligence has entered the mainstream thanks to “generative” algorithms that can write or create images that look to have been created by a person. The race is on to make these systems the foundation of a new, inexpensive computing standard with all the money flooding into the sector.

3. What are your expectations from the Budget?

We expect the Budget that is empowering the Retail Investor & Trader while equipping the economy & the capital markets

Streamlining Income Classification – Intraday cash market trading is classified as speculative income, but intraday derivative trade is classified as business income. Apart from this non-intra-day trades less than 1 year are classified as Short term. Speculative Income under Short term Income. This will make income classification easier for taxpayers and ease the system of ambiguity.

Simplification of Taxation in Trading & Investments – Most investors struggle to understand the threshold restrictions for determining whether an asset is classed as long-term or short-term in order to determine tax liability. This is due to the fact that the holding period for terming it an investment in long-term varies by asset class. While units of debt funds must be held for a minimum of three years to be considered a long-term capital asset eligible for a reduced tax rate on booked profits, units of equity funds must be held for one year, and real estate and unlisted stocks must be held for two years.

If tenure can be reduced from 3 years to 2 years to classify Debt as long term, it would reduce the complexity of long-term classification of instruments and would also encourage more retail participation in Debt Instruments.

Also, if Short Term Capital Gains(STGC) tax exemption can be extended to Rs.1 Lakh, it will encourage many new entrants into the Stock Market. STCG covered under section 111A is charged to tax @ 15% (plus surcharge and cess as applicable).

There is a need for relook at the Securities Transaction Tax (STT) and Commodities Transaction Tax (CTT) which have become a burden for the traders & investors. A rebate under Section 88E for STT/CTT, will be a welcome reintroduction as it will have a significant income impact and result in more volume trading and ensure a larger collection of STT/CTT for the government.

Industry status for SEBI-registered market intermediaries. This will assist in the removal of unjustified limitations , such as, the cost of funding and rising capital requirements for market intermediaries; and the creation of global financial services businesses.

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4. It is advisable to have a diversified stock portfolio. What are the defensive sector(s) where one can look at in 2023?

YES. IT is always a good idea to diversify stock portfolios. Investing on the Index and Exchange Index Funds (ETFs) is always good way to start.

Apart from the equity markets, BONDs (specially G-Sec) have been becoming attractive with assured returns of around 7% without any risk. The bond market is expected to have a good year in the coming year, so keep an eye out for it. Keeping the uncertainty that looms across markets, Bonds could be a good way to diversify and mitigate your risks.

6. What are the themes expected to work on Dalal Street ahead of Budget 2023?

Sectors to look out for will include Energy, Healthcare & Pharma, Speciality Chemicals, Technology and Manufacturing.

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7. What is your suggestion to the union minister to make this Budget market friendly?

Recognise the Stock Market as an industry since it best reflects the economy of the country. Continue to the reforms in Taxation so that people are motivated to Invest & trade. Encourage the Stock Market industry with incentives for brokers and well as for Investors.