All Sectors In Green: FMCG Leads Gains | NDTV Profit
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00:00Jitendra, it's been a while. Thanks so much for taking the time out. How do you approach
00:03this development, Jitendra? The market has erased all of the gains or losses over the last three
00:09days. We are back to Friday closing, pre-exit poll closing. At the current valuations with
00:14the current composition of a coalition government, what's your stance on India?
00:22Hi, and thank you for inviting me on your show. It's been a long time.
00:26Yes, I think, see, from a country perspective, from a financial market perspective, from an
00:32economic perspective, I don't see any major change that has happened. So, Prime Minister
00:39Modi is going to be there, NDA is going to form the government. And if, let's say, this verdict
00:47was there on the 2019 election, we would have cherished it. And this time around,
00:53the expectation was so high that the outcome was a little weakish and then the market
01:00started to have all these probabilities. But now the confirmation is coming in. We are going to
01:06see a stable government at the centre. This is what the market wants and this is what they are
01:11getting. From an economic perspective and from a stock market perspective, what we are going to
01:19communicate and we have been communicating is that, look, one leg, the investment-led growth
01:25that has been there, and it also had some kind of multiplier effect and hence the GDP growth
01:31was lopsided. So, while the growth was growing at around 8 odd percent, we have seen that is
01:38largely led by investment-led growth. The other leg, which is consumption, which is still more
01:43than 60 percent of our GDP, is a little bit weakish. But in the last few months or so, the
01:48monsoon expectation is now better than last year. And also, the rural consumption has started
01:57picking up. So, this rotation was inevitable in our view. And hence, we think that the market will
02:03remain a little bit resilient, probably another 3-5 percent correction possible. But in our view,
02:10the growth trajectory for India earnings remains intact. Only the valuation part
02:16will see some kind of cuts in certain pockets, which were frothy. So, some rotation,
02:23but overall, we remain constructive on equity so far.
02:26Okay. Jitendra, I don't know what the mandate of the funds or the schemes that you manage is,
02:34but do you guys look at it thematically or sectorally and is that changing now
02:40or it's still present continuous, if you will?
02:45So, it is a little early to say, but what we look at, yes, you are right, there could be
02:52some rotation that we are expecting because the leg that we have been playing so far on
02:57domestic CAPEX-related sectors, cyclical sectors, that has actually run up so far. And
03:04the narrative for the market is going to change towards slightly a defensive play.
03:09We are already bullish on pharma companies, which we remain bullish. However, we think that
03:16after this verdict and also because the fundamental shift is happening, like consumption
03:20is picking up on the ground, monsoon is going to be better. So, we might want to rotate
03:27portfolios. So, for example, the sectors that we continue to like and we will maintain our positive
03:33view will be real estate. We think that real estate companies, if on corrections, they offer
03:40very good buying opportunity. We are also of the opinion that in the second half, the RBI might
03:45ease their policies, starting with, let us say, internationally ECB might want to start
03:52cutting rates. US eventually will have to cut rates. So, net-net, I think in the second half,
03:59the monetary condition is going to ease, enhance real estate kind of sectors that we like.
04:06Also, some sectors which are linked to real estate, we started buying and we have been
04:12very positive views there. The rotation that we can think of is rural focused NBFCs, which have
04:19been a little bit languishing. So, we think that rural focused NBFCs, which are funding, which
04:27funds mostly the auto and ancillary, I think those kind of NBFCs we would love to buy at this point
04:36of time. Second, we have been very positive on PSU banks. We have started booking profits and
04:42after this verdict, I think the devaluation, there could be some probability of derating of some of
04:50the PSU banks. And hence, we think that the private banks, which have remained on the sidelines,
04:58over the past few, even years, some of the banks have been underperforming significantly.
05:04I think private banks, rural focused NBFCs, and then the real estate and light sectors,
05:12I think this is a sweet spot, apart from pharma, that we already have a positive.
05:17Jitendra, hi, Tamanna here. You know, just wanted to take that forward when you're talking about the
05:23focus on consumption. Do you see a further push on the premiumization trend when it comes to
05:29consumption? Because that's been the big theme. And just your view on autos, because before all of
05:34this sort of tumultuous last couple of days, the auto numbers got buried in all of this,
05:40but they weren't quite bad. And autos has been on an interesting trajectory.
05:46Yeah, Tamanna. So, you know, a few things in terms of consumption. FNCG, if I look at,
05:53they have already done so well over the past few sessions or so. So, I think
05:58most part of the rally is captured. And remember, FMCG is like a 15% max CAGR story,
06:06because they are not cheap. And this is a completely flow-driven, rotational kind of a play.
06:12But within the consumption, you are right, the premium consumption. So, we like hotel stocks.
06:16We think that some of the hotels which have fallen 15%, 20%, even higher from their peak,
06:23I think it's a very good buying opportunity. We think travel, tourism is a multi-year
06:30opportunity. And hence, some of the hotel companies that have fallen off the cliff,
06:34I think those are the better ones to get at this point of time. Second, we also like airline
06:42companies. I think fantastic outlook in terms of number of airports and the kind of premiumization
06:51that you talked about. I think in that team, we definitely like airline companies as a whole.
06:58So, within consumption, we'll pick pockets. In that auto, we like auto ancillaries. Why? Because
07:05we think that the OEMs are going to go heavily in terms of expanding capacities. OEMs are better
07:14but I think it is better to go for auto ancillaries where I think margins will remain
07:23capped but in terms of growth opportunities because EVs, new hybrid kind of vehicles,
07:29content per car, export opportunities. And I suppose Jitendra, the EV play as well.
07:35So, Jitendra Goel there with a whole host of ideas that we're looking at. Thank you so much
07:40for speaking with us today. It's been absolutely great hearing your views.