ETMarkets Smart Talk: Gold, infra, FMCG, and fixed income - Kush Gupta's dual strategy to tackle market volatility

Time of India

23-04-2025

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In this edition of ETMarkets Smart Talk, Kush Gupta, Director at SKG Investment & Advisory, shares his insights on navigating the current market volatility with a well-rounded investment approach.Amid global uncertainties and tariff tensions, Gupta advocates a dual strategy—diversifying into domestic growth sectors like infrastructure FMCG , and agriculture, while also building exposure to safe-haven assets like gold and fixed income instruments.He believes that with valuations turning attractive and India's consumption story intact, long-term investors have a real opportunity to create wealth, even in turbulent times. Edited Excerpts –A) Equity markets always come along with their fair share of excitement and volatility. For a long-term investor, these events provide a clear opportunity to add quality stocks to their portfolio and be part of businesses that will show growth when the tide turns over.The Nifty50 Index has recovered approximately 15% from its peak and the Index PE is down to 20.5, bringing it to the levels we saw two years ago. This is also the first major downfall since the V shaped recovery after COVID-19.I think it is a good time to start investing again and build a portfolio that could generate wealth in the next bull run. Indian economy is still young with a lot of head room for growth.We are becoming a consumer-led economy, once that can sustain global shocks and continue on its right path to provide investors with year-on-year portfolio returns.A) The tariff wars have been having global ramifications and will possibly change geopolitics for years to come. Most economies around the world rely on exports of goods & services to generate income, from larger countries like China to smaller ones like Bangladesh, Vietnam are all heavily dependent on exports.I think that a continuation of these tariff wars will create a hostile business environment with long term negative impacts on the markets.Currency movement across the world will slow down, foreign investments will reduce, and supply chain management will impact production which could lead to inflation in several markets.International trade will reduce, which will lead to cost-cutting measures, decrease capex and halt expansion plans in several key sectors that rely heavily on it.A) The much-anticipated rate cut by RBI was in line with the monetary policy, it has come with the intention to easy money circulation and propel growth in the economy.While this was expected, the slashing of GDP forecast was not until the tariff wars started. With US imposing very high tariffs and sending markets into a frenzy, it is indicated that global GDP growth could slow down to 2.3% in 2025.To assume that this will not affect India will be naïve, while our US exports only account for 1% of our GDP, we may not see a very big direct impact but a slow down across the world and specifically in US will definitely impact India Inc.Silver lining is that India is more of a consumer led economy rather than an export led, so we are better positioned to navigate this storm.I think Q1 & Q2 of FY26 will be under strain but towards the end of 2025 we will find our feet back on the ground.A) I have always been an admirer and firm believer in Indian markets. Our growth story is consumption led with increasing demand in both rural and urban areas.Our demographic advantage ensures enough head room for more growth. If investors have a 3–5-year horizon then I think one can consider entering the markets now.For an emerging economy we are well positioned by not relying on exports as much as other developing countries, so our fundamentals are still in place and are not shaken by these tariff wars.This global shake-up will find its ground and then growth economies will show promising numbers. Much of the selling in the Indian stock markets is because of sentiment and uncertainty and not because of change of narrative regarding the Indian growth story.Investors looking to deploy cash can start as the valuations look attractive with Nifty having corrected almost 15% from its peak.A) Indian investors are eagerly waiting for Q4 earnings numbers to start coming in. Q3 of FY25 was disappointing with the earnings slowdown across most of the sectors. We expect this quarter to outperform the last one as there were some green shoots across certain sectors like FMCG and finance.Consumer sentiment across Auto and durables was looking strong. Historically we have seen that end of the financial year drives higher revenue in these sectors.Government spending on infrastructure also increases in the tail end of the financial year, which is good for capital goods, infra companies and cement.Structurally, the last quarter has its advantages hence expectations are higher, along with the fact that a cyclic upside in earnings after a disappointing two quarters is also a strong reason.I think investors will get a much needed breather once the results start coming in.A) We have primarily focused on two things to safeguard our portfolio from the current volatility. First is diversification into commodities, I think while gold has gone up very significantly , its bull run may not be over yet.With growing concerns over global trade and instability of dollar, gold still remains go to safe haven across the world.Second is sectoral calls, we are looking at sectors that are linked to consumer growth and reflect India's domestic needs such as Infra, FMCG, Agriculture and Defence.I think these are essential pockets that are sustained from our internal ecosystem and global volatility does not shake them as much.At a juncture where international relations are strained, a defensive and inclusive approach towards investing is a good tactical call.A) Fixed income bonds or any other debt instrument play an important role in any investor's portfolio.When we advise our clients, we always have an allocation in mind towards debt funds/debentures and bonds depending upon their age, risk profile, income and other parameters.Apart from the clients' profile, often it's the markets that makes you rethink your allocation, and right now we are at that moment.I think in the given scenario we can expect further rate cuts and investing in corporate bonds with a fixed return for the next 24-36 months is a good idea.Further, RBI is doing a good job at currency management and due to India's fiscal discipline our fixed income market is attractive to global investors.If the tariff wards continue, we could also see downfall in dollar and rupee appreciating which will further make Indian bonds more attractive to foreign investors.I see the volatility in equity markets as a good opportunity to create wealth in the bond markets for investors.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)