Will markets become strength soon? Ashish Gupta’s outlook on income and important sectors

Where do you see the market going now that the income season of Q1 is almost over? Do valuations look comfortable given the recent consolidation and bags with good performance?

Ashish Gupta: The last six to seven months have been interesting for the markets, with several macro events that play in their own country and worldwide. However, their full impact on underlying economic data can still be seen. The next two months will be crucial. In the US, jobs and inflation data will reflect the effect of tariff increases since the beginning of the year. The US dollar has also written off around 10%-year-to-date, which rallies has powered in most emerging and European markets-bijna 20-30%. India has the lower teeth, but if the weakness of the dollar continues, flowing to India should become positive.

However, profit growth is on average with around 7-8%. The second half is expected to see an improvement, driven by a good monsoon, better liquidity and lower rates. Because the profit basis is lower in the second half, we could see better figures coming up.

Do you see dips as a buying option? How should investors strategies, especially with SIP streams at a record high of RS 28,464 Crore? Which sectors do you look at?

Ashish Gupta: Domestic streams remain very strong, but Fii flows are fleeting. From April to June we saw $ 4 billion in inflow, followed by $ 4 billion in the last 45 days. Strong domestic intake has been compensated by a significant range of both the sale of secondary shares and the IPO pipeline -around $ 21-22 billion in the last three months.

We focus on companies and sectors with better profit growth. We are overweight on NBFCs, who expect better margins and growth from RBI policy support and liquidity. We also like discretionary segments of consumers, such as retail and fast trade, and remain overweight on selected capital goods and energy sector.

You have reduced your position for overweight on cars. Given the recent optimism about festive question and some valuation corrections, your opinion has changed?

Ashish Gupta: The demand for passenger vehicles remains soft, although the demand of two cycling has been picked up. We have positions in a few companies that get market share, but in general the sector lacks signs of a broad demand excection. Stock levels are already high for the festive season. On the side of the automatic component, the demand of large international OEMs, especially in Europe, has also been moderated. That is why we have reduced exposure in both OEMs and components.

How do you see the general consumption story, in particular discretionary and high -quality categories versus staples?

Ashish Gupta: Consumption can be subdivided into three buckets-masses (staples/fmcg), middle income (urban) and high-end (travel, leisure, luxury retail). High-end consumption has been done well in the last three years and remains strong. In the past quarters, rural consumption has been picked up, powered by strong agricultural income and now performs better than urban consumption. However, the consumption of middle income remains weak and we keep a close eye on the festive season for signs of generation.

What can the next big trigger be for the market?

Ashish Gupta: So it just has to be better profit growth. So, as we have seen nominal GDP growth in the last 12 months, the double digit slows down to one digit, it is a kind of (10:51) on growth of companies and business results. So if I look at the growth of the business profit is only 7-8%, it is not an exciting market for foreign investors. So what we have to do is show that we go back to profit growth with double digits. Yes, there are selected sectors in the economy, selected companies that are still growing income by around 15-20%, but that is only about 23-24% of the total cohort. So we need a wider pick -up in profit growth.