Lo­cal Funds too will Give a Leg-up

The Economic Times - - Personal Finance -

Mon­eti­sa­tion of govern­ment as­sets to sup­ple­ment rev­enue Path-break­ing in­fra­struc­ture projects like GQ, with ef­fi­cient ex­e­cu­tion. The govern­ment can also fo­cus on op­ti­mi­sa­tion of nat­u­ral re­sources, es­pe­cially coal and iron ore; fast-track­ing of ap­proval­sre­lat­ing­tolan­dac­qui­si­tio­nan­den­vi­ron­men­tal­norms; re­duc­tion of cost of cap­i­tal for small en­trepreneurs; re­moval of the in­verted duty struc­ture toen­cour­age­lo­cal­man­u­fac­tur­ing; im­prov­ing the per­for­mance of PSUs through more ad­min­is­tra­tive free­dom; kick­start­ing the capex cy­cle; and en­cour­ag­ing in­fra­struc­ture cre­ation through in­no­va­tion like re­verse BOT. Eq­uity mar­kets are now pric­ing in a re­vival of in­vest­ment, ru­pee’s gains, fall­ing in­ter­est rates and faster growth. In this sce­nario, con­sumer sta­ples, IT and pharma sec­tors are likely to un­der­per­form the mar­ket in the near term. Small and mid-cap stocks may out­per­form large caps as they had suf­fered the most from the slump. ‘Value style’ is likely to out­per­form ‘growth style’ due to mean re­ver­sion of val­u­a­tion. PSUs with limited com­pe­ti­tion from the pri­vate sec­tor are likely to out­per­form due to cheap val­u­a­tions. PSU banks will be the big­gest ben­e­fi­ciary of growth re­vival while cycli­cal, en­gi­neer­ing and in­fra­struc­ture sec­tors should out­per­form the mar­ket in the medium term. A mir­a­cle may not hap­pen overnight, but well be­gun is half done. Im­por­tantly, the reader has to in­tro­spect how they are go­ing to par­tic­i­pate in the bull run which has be­gun.

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