Budget 2024: Debt Has More Direct Benefit Than Equity, Says Investor Madhusudan Kela

The bond market tends to drive interest rates lower, an outcome that is ultimately highly advantageous for equities, according to Madhusudan Kela, managing director of MKVentures Capital Ltd.

Kela pointed out that it is also crucial to acknowledge the expected influx of at least $25–30 billion next year due to its inclusion in JPMorgan's Government Bond Index-Emerging Markets.

Debt exhibits a more direct and substantial benefit in this budget compared to equity, Kela told NDTV Profit's Niraj Shah.

The country must enhance its credit rating to attract a more substantial inflow of funds. This pertains not only to the flows from foreign institutional investors but also to foreign direct investment and bond-market investments. according to Kela.

The managing director underscored that this liquidity infusion would play a pivotal role in benefiting both the bond and equity markets.

There are lots of chances to make money in the market by focusing on individual opportunities, Kela said. But he also cautioned that there had already been significant profits in the past three years, and people's expectations are very high. "There is a clear discomfort in a lot of pockets when it comes to valuation."

This time, it is tougher because the market has done really well, stocks are valued high, and there is a lower safety margin compared to the last three years, according to Kela.

Therefore, it's time to be careful, he said. "This is if I look at it from a six- to 12-month perspective."

However, Kela is very optimistic from a five-year perspective. He said the budget strengthened his bullish outlook as it indicates a clear continuation and underlying positive trends.