NBFCs may outperform banks as rate cut fears weigh on NIMs: Rajeev Agrawal
Live Events
(You can now subscribe to our
(You can now subscribe to our ETMarkets WhatsApp channel
"If we look at some of the recent metrics that have come out in terms of the PMI and all that, they are looking pretty strong, interest rates are coming down. So, in general, the sense on India's macro looks pretty good and that is one of the reasons that the markets are going up but clearly, it is not a cheap market as you were saying earlier in the show," says Rajeev Agrawal That is the fun of today's times that things are changing so rapidly that you have to either focus on them or ignore them completely. One possibility is do not even worry about all these things and focus on the fundamentals.So, one is definitely the flows. We have seen FPIs come back into the market quite strongly, Indian markets. I think, also as financial year 25 has ended and that was a single-digit earnings growth, there is expectation that given that the lower base the earnings going into next year will be strong.If we look at some of the recent metrics that have come out in terms of the PMI and all that, they are looking pretty strong, interest rates are coming down. So, in general, the sense on India's macro looks pretty good and that is one of the reasons that the markets are going up but clearly, it is not a cheap market as you were saying earlier in the show.So, in terms of what we are buying, actually we are rotating a little bit. So, what we are doing is selling some of the more expensive names and then utilising the cash available to get into some of the more compelling opportunities in this market.Areas where we are finding good opportunities continues to be financials where we think still there is this concern that interest rates are coming down which will have pressure on the NIMs especially for banks, but that may not be the case for the NBFC, so that could be one area that one could look at. Capital markets , again as the markets are coming back, some of the capital market players were hit quite hard when the correction came, so some of the markets either on the wealth side, asset management side, and as well as the capital markets, they continue to look quite interesting even at this point.So, in terms of financials, I am happy to give you some names, I know there are a lot of regulations around it, so I will just give the caveat that obviously this is not recommendation. But I think some of the power finance companies look pretty interesting to us. The power is going to be an area where there will be a lot of development in India given the power need and if we look at both PFC and REC, those companies should continue to grow their book.They are not necessarily that expensive even in this market and the asset quality is improving, so that is one area that we basically remain bullish about. In terms of where we are, if we are selling some, I think some of the renewable energy areas are where there is enough value possibly or enough price now that one could look at starting to get out, I mean some of the solar names you can see that they have gone up quite a bit as the business has improved, but frankly running a bit ahead and then another one is the defence area where clearly the names have run up very quickly and there might be an opportunity for people to take some money off.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Economic Times
26 minutes ago
- Economic Times
How is India benefiting from supply chain diversification away from China? Morgan Stanley's Chetan Ahya explains
Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads , Chief Asia Economist,says India is gaining advantage due to tariff differences with China. American companies are considering increased imports from India. Government policies are boosting manufacturing and exports. Electronics manufacturing is expanding beyond mobile phones. Infrastructure development will further strengthen India's manufacturing exports. Optimism in Indian equity markets aligns with positive economic fundamentals. The organization maintains a bullish outlook on think that the government capex has been the key anchor of the capex cycle and to the extent to which India has been embarking on this focus on manufacturing capex, the government's focus on infrastructure would be an important anchor to that private capex eventually improving as now, it is still the government capex and we had seen a bump down or a small slowdown period for government capex post general elections last year. But we have seen that in the last three-four months, there has been a meaningful pick up in government capex. In March, we saw that both central and state government capex growing at a very high pace and that has now taken the 12-month trailing centre plus state combined capital expenditure to close to the peaks that we had seen right before the general have seen this strength in government capex coming back again. As far as private capex is concerned, we were expecting that would have picked up a lot more by this time, but to the extent to which we have seen this trade tensions emerge from early this year that is going to affect the capex outlook not only in the region, but also in India, despite the fact that India has lower exposure to global goods reality is that it still has a meaningful exposure of 12% of GDP being its goods exports to GDP. We are expecting private capex to be going through a bit of an adjustment period in the environment of global trade tensions and then, over the next calendar year, that is, in 2026, we should see a pick up in private capex because by that time, the damage out of this global trade tensions would have been behind is benefiting on account of it. Right now, during a period where tariffs on China, even after having come down, are still at a very high run rate of 30% and from the 2018 period, you also have about 11% weighted average tariff on imports from China that the US has imposed. Cumulatively, we still have a 41% tariff rate for import from China for the US and that does give some sectors an advantage over China in terms of pricing and even sort of thinking about a bit more from a medium-term corporate sector in America is beginning to think about importing more from India. India is probably benefiting on account of that. Then, from a medium-term perspective, we have always argued that look, it is not just about taking away market share from China, but just getting rightful market share for India in the global goods exports and for that India's policies that were important and the government has been taking the right policies to boost that manufacturing sector have seen electronics manufacturing getting a leg up. We are going to see that expand into more and more products within the electronic segment apart from mobile phones and laptops. And at the same time, we think that from a medium-term perspective, this whole push towards infrastructure will really strengthen India's manufacturing exports. It is really a lot of the domestic policies that will be important from the long term apart from the short-term benefit that it may get on account of differential tariff rates between India and our regional and India strategists have been very constructive on India. So, we are aligned up as a house on being bullish on India.
Economic Times
26 minutes ago
- Economic Times
Tariff jitters temporary, long-term upside intact for India Inc.: Deepak Shenoy
Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads "Overall fund flows seem to be more concentrated towards domestic. There is also a lot more action in terms of results and some of these tariff news and all that stuff which is kind of still creating a lot of uncertainty," says Deepak Shenoy , Founder, Capital Mind We saw about 25,000 crores enter the markets as fresh entries into mutual funds in April and given that May was like a 9% plus month for smallcaps and smallcap funds have been the second largest recipient of funds in April, that will kind of bolster more retail investment into domestic funds even that, overall fund flows seem to be more concentrated towards domestic. There is also a lot more action in terms of results and some of these tariff news and all that stuff which is kind of still creating a lot of have come to the realisation that there is a little bit of back and forth and anybody says something about tariffs that is likely to be changed very quickly in whichever direction and mostly in the direction of removing those tariffs in a short period of I feel that in the end we will come down to 10% tariffs by the US to everybody and by and large some countries may receive a little more but I do not think this is going to be a major impact longer we realise this, it is less of an impact overall. The themes that seem to still be working is manufacturing, is financialization , and is maybe defence as themes that hurt perhaps are commodities because a large amount is based on world-wide demand as well, so that theme seems to be constant. I do not think today is any special day in that sense, but we have to be cognisant that as these tariffs come off and as eventually the wars in the world come to some kind of conclusion, the upside for India is definitely strong and I am biased, I am a fund manager, so we have to be positive but some of the positives are going to get more visible in the next six I will be honest. We run a company in this industry and therefore very-very heavily biased. But I still think this is the tip of the iceberg in terms of how much this industry can scale. I would not talk about who the winners will be and who the losers will be, but India is terribly under-financialized. Less than 18% of our GDP is in mutual funds whereas in America that number is more than 100%. So, to a certain extent there is a lot of room for the Indian organised financial industry to move. We are moving away from the real estate, gold, and chit funds kind of products to save into real financial products or financial products of a more regulated sort which has a lot more potential. You are seeing this happening. 25,000 crores a month net new inflows, most of that coming through SIPs This has not slowed down meaningfully even through the fact that the markets have corrected. We have seen more regulatory action that has fortified, so whether it is an RTA, whether it is an AMC, whether it is an exchange, or whether it is a depository all of them are getting more and more prominent in the overall structural framework of now it is becoming more and more easy to transact in them, to deal with them if a person dies transferring a financial product is way easier than trying to transfer say real estate or anything like a lot of these things add up over time and fortify people's minds into saying okay we will do this. You cannot sell half a house, but you could sell half a mutual therefore, people are actually getting more and more into financial products as such and the financial products themselves are investing in different things. You can buy gold through a mutual fund. You can buy stocks through a mutual fund. You can buy bonds and so on. So that way the industry itself has kind of scaled we are also seeing wealth management players, people who manage the money of relatively richer people even those stocks are kind of increasing in value and they are increasing in terms of growth as well, in terms of real profits. So, from that perspective we are yes, maybe we are overpaying for these stocks today, but a structural approach to buy them over a period of time is perhaps necessary for any growth oriented portfolio.
News18
37 minutes ago
- News18
Ashoka Co-Founder Reacts To Mahmudabad Row: 'Activism, Liberal Arts University Not Joined At The Hip'
Sanjeev Bikhchandani pointed out that while the founders are criticised as "dirty filthy capitalists," they are the ones funding the institution. Sanjeev Bikhchandani, co-founder and trustee of Ashoka University, has expressed concerns over growing 'activism" within the institution, suggesting it has become a 'headache" and hinting at the possibility of distancing himself from the university. His remarks came in an email response to an alumnus's criticism regarding the university's handling of Professor Ali Khan Mahmudabad's arrest. In a candid email shared on an internal mailing list, Bikhchandani emphasised that activism is not an inherent component of a liberal arts education. He stated, 'Activism and a Liberal Arts University are not joined at the hip. Ashoka is a Liberal Arts and Sciences University. Whether to be activists or not is a conscious choice people make." He further noted that his previous attempts to question the extent of activism at Ashoka were met with hostility, suggesting that some individuals have 'captured the institution" and resist any challenge to their views. Bikhchandani also highlighted the financial contributions of the university's founders, pointing out that while they are often criticised as 'dirty filthy capitalists," they are the ones funding the institution. He questioned the assumption that liberal arts education must be synonymous with activism, citing his own experience at a liberal arts and sciences college where activism was minimal, yet students thrived. 'In the past I have questioned the activism at Ashoka—each time, I have been pounced upon by the activists and their supporters, both within and outside Ashoka: students, faculty, activists, etc., saying that 'if you are running a liberal arts university, then activism goes with the territory', that 'I am an arrogant owner', that 'dirty filthy capitalists don't understand how a university runs' (they somehow forget that the same capitalists are paying their salaries)," Bikchandani wrote. Mentioning how he asked Google AI if all liberal arts universities are activist in nature, he wrote, 'The fundamental point I am making is that activism at Ashoka is a choice and it does not go with the territory. You can be a great liberal arts university and not be activist. Anyone who tells you otherwise is a liar." Professor Ali Khan Mahmudabad, head of the Political Science Department at Ashoka University, was arrested on May 18, 2025, by Haryana Police over a social media post related to Operation Sindoor, India's percision strike against terrorist bases in Pakistan and PoK. Mahmudabad had in his social media post praised India's strategic doctrine and the outcome of Operation Sindoor, but criticised 'symbolic optics' and the treatment of minorities. His arrest followed complaints alleging that his post was inflammatory and disrespectful to women in the armed forces. However, colleagues have defended Mahmudabad, asserting that his post supported the Indian government's stance and praised the strategic restraint of the armed forces. The Supreme Court granted Mahmudabad interim bail, extending it until the third week of July. The court has directed the Special Investigation Team (SIT) to limit its probe to the two FIRs filed in relation to Mahmudabad's Facebook post and has restrained him from posting any content online related to the ongoing case.
