Sanjiv Bhasin of IIFL Securities recommends investing in consumption stocks like Voltas and Havells. He says real income is going to be generated now from the tier II, tier III, and the smaller rural class, where we are seeing unprecedented growth He is bullish on metals and recommends Vedanta and JSW. Bhasin mentions investments in Indiabulls Real Estate and Indiabulls Housing Finance.
Founder of Macro Mosaic Investing, Maneesh Dangi, believes that the government s budget this year is primarily focused on the bond market. The government s efforts to lower fiscal deficit and create a favorable environment for bonds are likely to lead to a significant rally in the bond market over the next one to two years. However, Dangi notes that the impact of this rally on equity markets will be limited, as high-growth sectors tend to be sluggish during bond market rallies.
Sandip Sabharwal believes that the reduction in fiscal deficit will lead to lower interest rates, reduced inflation, and increased volume growth and consumption growth. This will create an opportunity to buy consumer stocks. The previous high inflation and employment issues impacted consumption, but with lower interest rates and entrenched inflation, volume growth on the consumption side is expected to come back. Going into July, there may be relief on income tax rates, but there are also expectations of tweaks on capital goods and inheritance tax.
Sunil Subramaniam believes that the banking sector may see a downgrade in terms of portfolio allocation due to the provisions announced by the RBI. However, he expects decent and healthy banking numbers, especially in corporate lending and SMEs. He also anticipates a pickup in mid and mass market segment consumption, supported by increased rural wages and government spending in an election year. He also likes PSU banks, which he believes will finance the capex cycle and be the vehicle of government dispersal.
Normally FMCG sector is associated with the power of brands. However, there are many industries, where a strong brand plays an important role. There are enough examples of firms that have built strong brands & have been getting premium on Street. The reason, a strong brand helps a company weather storms of an economic slowdown or inflationary pressure. Also over long term the final cost of doing business is lower, margins are higher as the concept of reverse working capital comes into play when the brand is strong. Yes, there are phases where they underperform because sometimes their valuations do get stretched, but then over time earnings do tend to help in normalization of valuations.