Just today ahead of that all important Budget and while the expectations are this time around that it could yet again be a growth oriented Budget largely on the back of the fact that we have got a backdrop of worsening macros as well as high inflation. Do you think there is going to be focus on consolidation, capex as well as capital gains this time?India really does not have an option but to have this whole capex growth story. Our consumer growth story has slowed down. We had very little capex from say 2014 to 2020. So I think there is no debate that we need capex and the government focus is very much going to be there be it the electricity sector, be it the roads, be it the railways, be it the ports.
I think there we do not have a choice and when you are building physical infrastructure in the country, I do not think any governments can afford to spook the capital markets with increasing the tax rates or tempering with things which do not really make sense.
We have had like six crore new demat accounts being opened so a lot of people are getting excited about the markets, retail money is coming in, FIIs see India as a very good option for their investments. So there is no case to tinker with the capital gains tax. As it is the government is flushed with a lot of revenue and the fiscal deficit targets have got extended by three more years because of the COVID. So we are in a pretty good position to drive this whole capex and growth oriented reforms in the Budget.
Obviously everyone is expecting all of that but having said it in the introduction, you also said banking which was the priced pack last year the way it ended, has come under pressure. So tell us stock specific ideas. Where would you put your money? What would you buy?The two big themes in 2023 for the banking sector will be that we no longer will have low interest rate and easy liquidity. So cost of deposits is going to be one real challenge in the year 2023 because liquidity is tighter globally and in India and you also have lower growth coming through. In such an environment you have banks which have very good liability franchise, those will do well. So
comes right at the top end of this. We have seen good correction and the stock has gone nowhere for close to 15 months. Now so once FII selling subsides I think there is everything right going on with the bank so it is just more of this whole FII selling which is keeping the stock under check. Then you have , it is quite cheap, delivering well, turning around so maybe a large upside is there because there is a valuation upside also which one can catch. But beyond these Axis and ICICI even has undergone a nice kind of consolidation. The merger is on track and despite all the challenges they have been able to grow around 20%. Kotak had surprised us with more than 20% growth after a very long time. So this whole pack is looking good, go ahead pick whatever you are comfortable with. I think the whole pack is destined to do well in the next 12 months and within the PSU pack my pick will be the same as the one with Nooresh which is because they really have a good liability franchise and they have good capabilities on the retail as well as corporate sides. So SBI is a good mix of a lot of these things, undergone a big correction because of the controversy going on outside. So yes I think these three or four names could really fire in the next year.