In an interview with ETMarkets, Gupta said: “India is a long-term story with solid economic expansion driving high earnings growth, all thanks to fundamentals,” Edited excerpts:
Despite challenges we have Modi 3.0 which looked a bit uncertain a few days back and the market has also recovered from the lows. But will it be a smooth ride? What are your views?
Earlier, the market predicted a continuation in political stability. But the margin was much closer than expected. However, even if the BJP didn’t win a majority on its own, the NDA is still probably going to form the government.
On the day of the result, the market experienced increased volatility. But we anticipate that this volatility will lessen over the coming days and that the market’s attention will eventually switch to macro and solid fundamentals, which continue to remain strong.Do you have further corrections in the market, or have we bottomed out?
Equity is not a constantly upward-sloping line. In equity, there is always volatility, the market can correct, and it should be seen as an opportunity to invest.However, in the current situation, there is a chance that market volatility may persist for some time. Still, we believe retail investors should seize this correction as a chance to make quality investments.To reduce volatility, investors can consider diversification by investing in Multi Asset Allocation Funds and other asset classes.What about policy reforms? Do you see a shift of reforms to welfare politics?
In the last 10 years, we have seen a stronger government focus on the supply side, as compared to the demand side. Even during COVID-19, the demand side push or populist measures were much lesser in India, then seen in other economies.
However, given uninspiring electoral performance & coalition compulsion, there is a possibility of some demand side push/populist measures by the government.
Which sectors are likely to do well in the new regime? FMCG and IT stocks have picked up momentum recently. What are your views?
Firstly, investors should focus on long-term growth sectors, rather than being swayed by short-term market fluctuations.
Moving forward rural and consumption will likely be a key focus area for the government, hence rural recovery beneficiaries such as FMCG, Two-Wheeler, Tractor, Rural focussed businesses in Retail & Finance will likely see an earning upgrade & thus could do well.
About the IT sector, while it does not get impacted by the changing political environment in India the sector will soon be facing another volatility event in the form of US elections.
Railways, PSUs, and PSE rose in the run-up to the election outcome. Do you see derating in some of these sectors and how should investors approach them who are already invested?
With the earlier focus being on ‘Make in India’, many upcoming and underperforming sectors received regulatory/ government support and started to show positive results.
With the government budget likely moving to consumption we need to see whether this support will reduce. Hence, there is a possibility of PSU valuations undergoing a change as the growth outlook changes.
FIIs were net short in the run-up to election results. How are they viewing India for long-term investments?
India is a long-term story with solid economic expansion driving high earnings growth, all thanks to fundamentals.
Given the development of Indian stocks, we predict that most FIIs will eventually return to the market with larger investments because they will feel a sense of FOMO.
While short-term oriented FII may choose to trade long or short positions, India offers a decent risk-return pay off to long-only funds such as endowments and global pension funds.
This should ensure that India receives its fair share of global FPI flows going forward too.
Is it time to reshuffle the portfolio? What is the ideal asset allocation one can look at in the 30–40-year age bracket?
The equity allocation should be well diversified & anchored to megatrends. The focus should be on investing in quality companies. Investing in systematic investment plans with a long-term horizon is recommended.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
