Are you ready to rebalance your portfolio post-budget?

Stock Market Investment Shot,9th December 2022

Stock Market Investment Shot,9th December 2022

If you witnessed the 2021 post Budget market, markets were almost sore by a whopping 4.7%.

This was likely not because the budget quoted was super amazing but it was just a mere correction.

The finance minister’s last year’s budget’s ‘get well soon’ signal to the economy was rather taken so seriously that the market took a long jump!

Well, wassup with the Budget 2022 then?

Alright, this would be a topic almost everyone would know, but what about adjusting your portfolio with the budget?

Have you thought of it yet?

Do you think your portfolio is still healthy for the new financial year?

If you doubt that, my dear folks this blog post today is for you!

In today’s blog article let us discuss rebalancing your portfolio post-budget!

Just like the previous year, the market has been trembling for weeks, will there be a similar situation?

Well, you saw the market reacting!

Getting started with the initial reaction and analysis of the budget signals a favourable opportunity to rebalance your portfolio towards the upcoming cyclical markets.

Even if you are an investor who is thinking to stay put with the market for a longer period of time this is the best time to rethink your asset allocation plans.

Here at Jarvis Invest, Jarvis looks after everything right from picking your risk profile, stocks and to monitor your portfolio. 

In short ‘Artificial Intelligence’ powers everything that we do at Jarvis Invest!

What are the various sectors do you think will have reacted to the budget?

After continuous trembling Nifty bounced back to about 9.25% and Nifty bank by has given 21.2%, Large caps and midcaps have outperformed whilst small-caps managed to flatten amid such volatility.

Banking, Financial Services, Real estate, Automobile, Infra and Metals have already surpassed the expectation mark after budget while FMCG, IT, Pharma, Oil & Gas, Energy are still lingering through margins.

Why such a partial response?

The markets are in ecstasy that the nation’s economy is enjoying growth at a rate never looked at before and the most surprising fact that from the time market hit the bottom the rate at which it recovered is astonishing.

Even Foreign investors are happy by contributing 12,000 crores in the first week of February, whereas not to forget they have already contributed a whopping amount of 9000 crores already in the month of January. 

The key themes to look out for in this rally would be:

Defensive vs Cyclical stocks

There is no doubt at this years budget will be focusing on growth and still recovering the economy, and hence special emphasis would be on the cyclical sectors, these are sectors that tend to grow the overall economy).

The cyclical sector includes automobile, real estate and consumer durables.

With the advent of technology, the banking & financial sector also form part of India’s cyclical sectors even though in the present the growth chat for this sector is very slight. 

The defensive bucket includes IT, pharma, FMCGs and Energy.

This sector is labelled as are seeing underrated during budget times.

What about Banks?

As a result of key banking transformational reforms, the nation’s financial infrastructure has been leading the rally.

These transformations led to easy banking, privatizing and recapitalizing PSBs, and not to forget setting up a Development Financial Institution specifically for infrastructure purposes.

Infrastructure

The key to linking environmental health and public health is by linking infrastructure.

Indian economy is expanding multi folds because of the Infrastructural growth.

Therefore, the sectors which count in the umbrella of infrastructure gain special limelight in the budget. 

All the industries supporting infrastructure (cement, metals, etc) witnessed a 34% increase in capital expenditure. 

Thanks for the announcement of the Development Financial Institution framework for infrastructure financing.

Jarvis’s say

Our risk customised portfolio has a unique feature of performing well in trending as well as trembling markets.

This is because of the risk profiling and dynamic asset allocation feature. 

Our Artificial Intelligence-powered brain, Jarvis rebalances your portfolio and picks the best asset classes according to the market condition.

Our Diversified portfolio has also given whopping returns in the past few months. 

If such market conditions continue, we are sure that your outperformance is just around the corner.

How, What and why will it work in the future?

Let’s not just sit and discuss the future, because no one can predict the future perfectly. Therefore, let’s have a look at the key frameworks/strategies that could be handy in the future. 

The budget of 2021 indicated cyclical recovery and so is the budget 2022.

And we have witnessed that such a recovery cycle lead sectors like automobiles, banking, real estate to defensives like IT and pharma sectors.

In the current scenario, the commodity price is high, leading to rise in prices of metals then reflecting this price rise on various sectors, this situation could be a triggering point for high inflation.

Currently, even though India’s inflation falls in the category of ‘reasonable’, there are 50-50% chances of controlling this inflation moment. 

It is anticipated that even the bond yields might go higher to pre covid levels, which might cause serious trouble in the equity markets. 

Another factor that might cause nascence for the equity market is the US FED’s stopping the stimulus which is expected to arise in the upcoming quarters.

Being an investor, we cannot control the economy or the happenings in the market, what we have control over is the asset allocation of our own portfolio.

And the key factor is to be invested, rebalanced and reallocated keeping in mind all the risks constraints under control.

Jarvis: How am I changing your portfolio?

Oh! That’s simple!

I would be considering your risk profiling and would make significant financial changes, i.e I would deallocate and reallocate funds considering all the principles of a balanced tactical portfolio

TADA!

Your portfolio is rebalanced!

You are ready to take endeavour your investment journey further!

Hope this blog was useful!

Happy Investing!

Until next time…

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