Post the Union Budget for 2019, and subsequent correction in the market due to FPI surcharge many investors were confused about how they should proceed to invest in equity. The rollback of FPI surcharge offered some boost to the market and investors who had earlier preferred to adopt a wait and watch approach are now back in the market.
But given the uncertainty surrounding US-China trade wars and signs of an upcoming recession signaled by the America’s inverted bond yield curve the question “How to invest in equity?” still looms large across minds of most investors.
To find the answer to this question, let’s look back in time to the last union budget of 2014. When Narendra Modi rode to power in 2014, one of the top priorities announced by the government was the cleanliness mission emphasizing on hygiene and construction of toilets for all under the Swachh Bharat Abhiyan.
After Prime Minister Narendra Modi’s Independence Day speech, the ministries involved in the Swachh Bharat Abhiyan disbursed funds for sanitation campaigns. Investors who priced in the benefits expected to accrue as the Swachh Bharat Abhiyan mission progressed made substantial gains as the share prices of companies engaged in manufacture of sanitary ware products increased.
The below table reveals how the budget allocation and Prime Minister Narendra Modi’s push for Swachh Bharat Abhiyan helped leading sanitary ware manufacturers indirectly.
So you can see that the budget 2019 too gives some definite clues to investors which can help in answering the question “How to invest in equity post budget 2019?”
Electrical vehicles and infrastructure, the best two sectors to invest in equity currently
In the Union Budget for 2019, the government has specified its intention to promote electrical vehicles as an alternative for petrol and diesel vehicles. This move is expected to not only bring down huge import bills of fossil fuels as well curb rising emissions which cause huge health problems.
This presents a huge opportunity for companies which manufacture electrical vehicles as well those into manufacturing batteries for electronic vehicles. According to estimates the market for electric vehicle battery itself is estimated to reach $300 billion by 2030. The electric vehicle segment offers a big opportunity for investors who wish to invest in equity currently.
Another sector which received a huge boost in the form of a 100 lakh crore allocation is infrastructure sector. This amount will be mainly used for development of water grids, modernization of railways, and construction of 60,000 kms of national highways, regional airports, ports, new townships and urban centres. This massive push in infrastructure announced in the budget 2019 will be highly beneficial for companies operating in the construction, cement, capital goods & engineering sector. Hence investors looking forward to invest in equity can definitely consider investing in some of the top performing companies in the infrastructure sector.