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Glass half empty or half full? Ravi Dharamshi on how consumption stocks will fare
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Last Updated: Apr 17, 2021, 01:15 PM IST
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What is the outlook on FMCG or the consumption space? Is it glass half full or half empty?
I would say it is glass half empty and primarily because the odds are not stacked in your favour in terms of valuations. There was a slight bump-up in growth in essentials when the Covid first emerged last year but that turned out to be more of a short-term phenomenon and now the margin pressures are going to emerge.
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MUMBAI: Domestic equity market is likely to remain rangebound next week as investors are unwilling to take bullish positions at a time when the pandemic is raging and making them second-guess their rosy outlook for the economy and earnings growth.
The government’s repeated insistence on not imposing a national lockdown despite the country reporting over 200,000 new cases on Friday has kept investors from panicking and thereby, limited the downside in the stock market.
Yet the surge in cases and localized lockdowns across the country has fogged investors’ ability to forecast earnings growth and economic activity too far in the future. Brokerages have already started to downgrade India’s growth forecast for 2021-22, even though there is limited clarity on how long the second wave will drag on.
Last time when we were speaking in the month of January you had talked about as to how the run up from last March has been like the beginning of a new bull run. You also predicted that the market is going to see some volatile bouts. Would you say that now with the second Covid wave and return of curfews and mini lockdowns, the market has got derailed?
Let me first put in perspective what are the legs on which this bull market is running. The start of this bull market was from very low valuations and we have had a fantastic rally. So valuations have run up a lot, but at the same time the earnings have also been good. You cannot say that only prices are going up and valuations are getting expensive.
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