According to Gupta, only about 2% of MSCI India’s income is directly affected by the rate. “The noise is large, but the direct impact on listed companies is very small. Short-term investors and traders can sell in a panic and be able to keep selling foreign portfolio investors (FPIs). But this also opened buying opportunities,” he explained.
Gupta emphasized that sectors related to domestic consumption will benefit the most. “The government uses all tools – tax cuts, cuts, GST measures and support for the demand in the countryside – to revive the consumption. This is positive for consumer technology, cars, building materials, paint, sustainable and staples,” he said.
Bags of value in midcaps and smallcaps
In the case of midcaps and smallcaps, Gupta pointed to different value areas. He sees a strong potential in building materials, household pharmaceutical and chemicals. “Multiplex, tiles and paint companies are attractively appreciated and have to take advantage of the real estate cycle. Domestic pharmaceutical pharmaceuticals is a sweet spot with a steady growth potential of 15-20%, while chemical companies have the capacities and can produce a strong return,” notes, “notes,” not.
Most Indian chemical companies mainly export to Europe and the US, while many Chinese companies come across antidumping rights and offer a considerable opportunity. Indian companies have recently completed or are close to finishing capital expenditures, which improves production capacities. With promising valuations and increasing demand, their growth potential is attractive to commercial values, says Gupta.
Despite current volatility, Gupta believes that investors will benefit from patients from these opportunities. “This is the time to look beyond the noise and to concentrate on sectors where the basic principles remain strong,” he added.
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