Can the Budget give a boost to the rural theme? Deven Choksey answers

“Projects like electricity and gas have been delivered and probably these two areas are going to be the significant drivers of allocation of funds in this particular Budget. At the same time, the government is very committed that before 2024, they would like to see the entire rural India getting this infrastructure in place. Other than these two areas, road infrastructure is also likely to see large allocation,” says Deven Choksey, MD, KRChoksey Holdings Pvt. Ltd

What is your outlook on the rural theme? Given that the Budget is expected to give a significant boost to a number of rural infrastructure schemes and spur rural demand sentiment, are you pencilling in specific sectors or stocks that could see a leg up on the back of this?
If I have to look at the perspective of how the rural infrastructure has been created, the most important completion of the project would be housing for rural masses and also water-linked tap for rural masses. Other projects like electricity and gas have been delivered and probably these two areas are going to be the significant driver of allocation of funds in this particular Budget.

At the same time, the government is very committed that before 2024, they would like to see the entire rural India getting this infrastructure in place. These are the two areas which are going to see a larger amount of allocation of funds. Along with that, road infrastructure, where the government has always committed to getting momentum and we are likely to see a larger amount of road infrastructure coming up as well.


If these projects are completed, then it would probably create sufficient employment opportunities in rural India. That is where the maximum benefit could be seen in the hands of rural masses in the country. Other than this, the farmers are always at the central point of attraction and they have been provided with a large amount of the infrastructure related boosts, including in the area of e-trading of commodities, the agri e-commodities. In my view, these are some of the projects which could realize and start giving better results to the government going forward.

What is your take as far as some of these QSR companies like West Life, Jubilant etc are concerned?
The disposable income in the hands of individuals with rising amounts of spending is happening in these QSR companies as well as entertainment companies like PVR would have relatively better business to talk about.

We have already seen a larger thrust in this area of activity from the demand point of view. From that perspective too, these companies are looking reasonably convincing. I am not completely sure about the valuation at which they are traded because some of these companies have always been a little bit more expensive compared to the normal markets.

However, in a corrective downside or fall in the market due to any reason, they become an attractive opportunity to buy because the consumption theme remains absolutely convincing and strong going forward in the current year and thereafter as well.

How much of the FPO success from a market standpoint is going to be considered as a big relief because there was anxiety and there was nervousness in the market that if the issue would have failed it would have had a snowball or domino effect on the underlying stock prices of Adani Group’s and also for markets in particular?
This is very important because the market was fearful that if this particular issue does not get subscribed, then the fallout could be on the banking sector, on MSCI related holdings and so on and so forth. Since this issue has been subscribed, at least those fears will recede and as a result, the confidence level of the market participants into the market would increase which in the last two three days, had taken a significant amount of beating.

Also as the issue is through, the Adani Group can now focus on execution of the projects as well, repairing the damage in whichever way they could. In that order, the market would have a sigh of relief ahead of the Budget.

What happens to the overall market sentiment and what happens to Adani Group of stocks?
Individually merit based companies will start recovering the prices. Some of the companies have hit the lower circuits because of the fear of selling coming into MSCI related portfolios. If that particular fear recedes, then some of the companies would recover. I do not know about a V-shape recovery but there would be a smart recovery and stability in the prices.

Whether it would reach all-time high again is a time driven activity. But fundamentals of the company play an important part. The fundamentals have not changed. From that perspective, I believe it would be natural for any long-term investor to come to the Indian market and buy these stocks at a corrected price.