Budget 2021: Focus to be on growth more than fiscal deficit, says Punita Kumar

According to her, liquidity is still strong across the globe. “The moment US President Biden is looking to potentially have another round of stimulus, it looks like rates may still stay low for a while. The worry is that at some point later in the year, this stimulus may start getting slightly withdrawn or we may see rates rise as inflation picks up,” she said.

“President Biden’s tax policies might cause some capital gains to go up potentially or other taxes to go up because somebody has to fund this stimulus,” she said.

In terms of auto and auto ancillary space, she believes auto sector has more legs but one needs to be stock specific.

“The auto sector has been an underperformer over the medium-term. So any recovery will definitely boost the auto sector. Anything that is rural oriented, any commercial vehicles (CVs) that are linked to the rural economy and the rest of the auto component sector we are seeing it benefiting. As we see business activity resume across India, we are seeing most companies operating at COVID-19 levels that will also help logistics and travel and other segments that will benefit the auto sector. Auto sector has more legs in my view, one has to be stock specific and valuations have to be watched,” she said.

“If in the budget, there is some form of scrappage policy then that might boost more car production and car sales as well,” she mentioned.

Regarding IT sector, she believes the trends are still good, the commentary from the IT majors has been positive. “There is still business wins happening, large deals happening and maybe with President Biden the immigration policies will not be as bad, so that will also help a little bit on the cost side,” she said.