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Economic Times
29-07-2025
- Business
- Economic Times
Can Indian economy thrive amidst market slowdowns and tech layoffs? A Balasubramanian answers
A Balasubramanian, MD & CEO, ABSL AMC, says Indian markets are consolidating amidst favorable interest rates and strong agricultural output, boosted by a good monsoon. The upcoming festival season is expected to further stimulate the rural economy. Government infrastructure spending continues to drive cement and steel sales. While bilateral trade deals offer potential benefits, technological disruptions, exemplified by TCS layoffs, are causing some market caution. Is a bit of a slowdown being seen at this moment of time? A Balasubramanian: If you look at various lead indicators, except for a few of the high frequency indicators like cement and steel, in general we are seeing some bit of slowdown which of course also reflects in the IIP numbers. The narrative has come from the financial sectors, especially one of the leading finance companies have said that MSMEs have been slowing down and therefore there could be a possibility of delinquencies. That is not uniform and each company has different narratives to give. But broadly people are a bit cautious and there has been some bit of pressure in terms of lending growth, more than anything else, as the lending growth becomes very aggressive, then naturally they will have enough earnings. They will manage some of the other challenges that they may have. But the current narrative is coming from financial sectors, largely related to the lending growth being lower than what they could have otherwise done. Certain segments of the market have done pretty well. Banking has done pretty well because the cost of financing has come down, thanks to the rate cut, and definitely the cost of borrowing has been coming down, CASA ratios have come down and even from the borrowers point of view, being linked to the repo rate, the lending rates have come down. The MCLR is also down by about 50 basis points. We cannot come to judgment on the basis of the one quarter numbers. We still have a long way to go. This quarter, keeping in mind the current situation, the companies also must be playing a little cautious and making a little higher provision so that they will be able to manage things as we move forward in the next two-three quarters. Where do you think that is going to finally settle for the markets because there is still a big question mark on what is going to happen in the tariff deal with the US? We have seen a little bit of a spike in crude prices overnight, but it's still pretty much at a comfortable level. Is it going to translate into a sedate market or will the early onset of the festive season resurrect it? A Balasubramanian: Yes, of course, one, leave aside the earnings for the time being. Earnings are keeping the market under check as well as whatever the tariff outcome is. But if you leave that aside, clearly for the rest of the financial year, definitely the interest rate is going to remain favourable and agriculture crop, not even the sowing, even the agriculture output that has come in the last one, one-and-a-half months, have been pretty good and the monsoon has spread across the country well. The water levels are pretty good and in the next two-three quarters, visibility from agriculture income going up quite significantly is also high. The festival season has been supported by growth coming back with a low interest rate state regime. We will see the rural economy getting a kickstart. The festival season is starting early and we will have to see how it shapes up. We will probably see a good momentum coming back. We are not seeing any slowdown in terms of government-led infrastructure spending. We are continuing to see that momentum continuing and that is why cement sales and steel sales are up, mainly driven by the government's continued focus on infrastructure building. Therefore, the market is going through a consolidation phase. It is good to have markets go through a consolidation phase. It is preparing for some bit of time value correction which will also make the valuation attractive. As the number starts coming a little better, you would probably see that improvement coming back. The bilateral trade deals the US has entered into so far has proved to be favourable for both the countries. I would presume India too can expect a similar fate. But, we cannot speculate on this. We are definitely seeing a bit of slowdown where even a company like TCS is going for large-scale layoffs. This has nothing to do with the government and has something to do with the technological disruptions and this to some extent would make people a bit cautious. But when you say that the agri income is expected to inch up going ahead, along with that, we have already seen many factors that could be at play and some of the other FMCG companies also highlighting that. The rural economy was doing well but it is the urban economy that is showing signs of improvement. What within the consumption basket can one look at now? Can it be autos? Can it be tractor sales? Can it be some of the staples or discretionary plays? A Balasubramanian: Largely, it starts from the autos. Two-wheelers have been doing well, but at the same time, in the last few months, it also has gone through a marginal sales growth. But two-wheelers basically address the common man's needs across the country, including rural as well as urban India, where we should see some kind of pickup. The second is consumer spending, especially in the festival season. Generally the household spending in terms of refurbishing as well as other household items will also improve as the demand generally goes up. Financing will also be made available for this segment of the market. Therefore, even in consumer durables, we should see some kind of a pick up as a result of the increase in spending in the coming festival season. The tractor numbers are far better than what was expected, almost about 6% registration growth has come which in some sense is good as people are spending on agriculture and that is reflecting in the growth momentum. There are no true indicators of consumption pick-up. The true indicator will come from autos as well as consumer durables. How should market participants draw their portfolio? A Balasubramanian: Global uncertainty is not just driven by tariffs and now is coming to an end. The other important factor from a global market point of view is the disruption in the technology world and the oil prices which have been lying low and could also have its own impact. The general slowdown that we are witnessing in the global market could probably keep it under check for some more time given the fact nowhere in the world we can say the valuations are very cheap and therefore we will always have that holding back the investment decisions. Having said that, I would say there is a significant slowdown. The Fed governor would probably cut more aggressively than what he had done in the last few years. In the last six months, no rate cut has come. The US will not hesitate to cut the rate quite substantially to boost the overall sentiment and get back on the growth path. Therefore, in the next three-four months, we will have to keep a close watch on how each of the moving parts will drive the sentiment.
Mint
28-07-2025
- Business
- Mint
Indias ABSL AMC ups long-duration government bond bets, sees more rate easing
By Dharamraj Dhutia and Khushi Malhotra MUMBAI, July 28 (Reuters) - India's Aditya Birla Sun Life Asset Management Company is turning overweight on longer-duration government bonds, including 10-year, 30-year and 40-year maturities as it bets on at least one more rate cut, a senior executive said on Monday. "If we look at the sovereign yield curve, the one-three year bonds have rallied, but the 10-year, 30-year and 40-year bonds are at a very good space and as a result we are overweight duration, looking at that point," said Sunaina da Cunha, co-head fixed income (credits) at ABSL AMC, that manages debt assets worth 2.23 trillion rupees ($25.78 billion). Even 10-year state government bonds offer attractive spreads, she said, adding the fund will stick to an accrual strategy. The 10-year benchmark 2035 bond yield stood at 6.36%, while 30- and 40-year yields, were at 7.01% and 7.06%, respectively. With the Reserve Bank of India's policy rate at 5.50%, the fund manager expects at least one more 25-basis-point cut. "Food inflation would be kept under control, and good monsoon and spatial distribution will also provide us benefit. This opens up reasonable amount of space for a rate cut," she said. Fiscal policy remains in consolidation mode and has already done its part; with inflation running below target, it's now up to monetary policy to respond. "A 25 basis point rate cut is definitely on the cards, and there is a possibility of another 25 bps after that." Despite the preference for longer duration government bond exposure, the fund house prefers lower tenors on their corporate bond investments. "On the shorter end, we are overweight on short-term two-three years corporate bonds, because there is still a decent spread in the two-three years bonds, so there is juice there." The AAA-rated corporate bond yields were at a spread of around 80 basis points over the corresponding government bond yields. ($1 = 86.4910 Indian rupees) (Reporting by Dharamraj Dhutia and Khushi Malhotra; Editing by Nivedita Bhattacharjee)
News18
24-07-2025
- Business
- News18
Aditya Birla Sun Life AMC Q1 net profit grows 18 pc to Rs 277 cr
New Delhi, Jul 24 (PTI) Aditya Birla Sun Life AMC, part of Aditya Birla Capital, on Thursday posted an 18 per cent increase in profit after tax to Rs 277.1 crore for the three months ended June 2025. In comparison, the asset management firm had posted a profit after tax (PAT) of Rs 236 crore in the same quarter of the preceding fiscal. The company's revenue from operations rose 16 per cent to Rs 447.4 crore in the quarter under review from Rs 386.6 crore in the April-June quarter of the preceding fiscal (2024-25), Aditya Birla Sun Life AMC (ABSL AMC) said in a regulatory filing. ABSL AMC's assets under management stood at Rs 4 lakh crore at the end of the June quarter 2025, reflecting a 14 per cent year-on-year growth. The company's board of directors has approved a final dividend of Rs 24 per equity share (face value of Rs 5 each) for the year ended March 31, 2025. This is subject to the approval of the shareholders at the ensuing annual general meeting. Additionally, the board of directors approved the incorporation of a wholly-owned subsidiary, Aditya Birla Sun Life AMC International (IFSC) Ltd, in Gujarat International Finance Tec-City (GIFT City). view comments First Published: July 24, 2025, 15:15 IST Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
Time of India
17-07-2025
- Business
- Time of India
Muted Q1 earnings expected, but hopes pinned on second-half recovery led by oil, cement and consumer demand: Mahesh Patil
"For now, we expect the market to remain in a narrow range. It has become more stock-specific . Clearly, companies that report better-than-expected earnings are being rewarded, while those that disappoint are getting punished. We're now in a phase where macro factors are subdued, and it's the micro factors that will drive the markets from here," says Mahesh Patil, CIO, ABSL AMC . The earnings season has just begun. Mahesh Patil: Yes, markets have seen a pretty good rally over the last two to three months, not just in India but globally. We've seen the S&P and other US indices breach previous peaks, and that's where the bigger challenge lies. Some of the concerns—be it geopolitical risks or tariffs—are now easing, with a bit more clarity emerging. We're seeing some trade deals being signed. India too is expected to sign one soon, which may be more favourable compared to others. 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The focus is clearly on earnings growth and whether we're beginning to see a shift in that trajectory. Over the last three to four quarters, earnings have grown only in single digits. The market is looking for a turnaround. Even this quarter may not be too strong—we're expecting mid-single-digit growth—but as we move into the second half of the fiscal year, earnings momentum should pick up. That will be driven not just by a lower base but also by a recovery in sectors that were weak last year. This should help shape the market's course moving forward. For now, we expect the market to remain in a narrow range. It has become more stock-specific. Clearly, companies that report better-than-expected earnings are being rewarded, while those that disappoint are getting punished. We're now in a phase where macro factors are subdued, and it's the micro factors that will drive the markets from here. You spoke at length about earnings expectations—mid-single-digit growth is what you're expecting. But which sectors do you believe could outperform on the earnings front, and which ones might underperform? Mahesh Patil: From an underperformance perspective, some of the larger sectors are dragging overall growth. For example, the banking sector is likely to see muted growth due to NIM compression following rate cuts. In IT, a few results have come in, and again, growth seems lower. Even in the auto sector, growth will likely be somewhat weaker. Live Events On the other hand, sectors that could show higher growth include oil & gas. Last year was a washout, especially for oil marketing companies. With oil prices now down and marketing margins looking strong, we could see a big jump—mostly due to the base effect and improved margins. The cement sector is also recovering after a tough year with EBITDA per tonne at the bottom—so some improvement is expected there. The telecom and pharma sectors should remain fairly steady. These sectors could see some upside, but the rest will likely perform in line with average growth trends. The last time we spoke, you said the markets had largely priced in both the positives and negatives, and the range-bound behavior has continued since. Given the ongoing uncertainty around tariffs and lackluster earnings, what could trigger the next leg up in the market? Mahesh Patil: As I mentioned earlier, the key lies in improving the earnings trajectory. We've been stuck in a zone where overall earnings growth has remained in the mid- to high-single digits. The recent GDP print, while strong in real terms, was only around 9.5% nominal, largely because CPI has dropped to about 2.5%. That reflects a lack of pricing power. However, there are positives: the impact of easy monetary policy, better system liquidity, and a good monsoon could all support a pickup in consumer demand in the second half. That, in turn, should improve pricing power across the board—particularly in consumer and consumer discretionary sectors. This could become the trigger for the market to regain momentum. Within the consumer discretionary basket, is there any particular segment you favour at this point—autos, retail, or something else? Mahesh Patil: In the auto sector, two-wheelers could do better in the second half. Some consumer durable companies are going through a weak quarter, partly due to seasonality and the early monsoon. But as we move ahead, we expect this segment to improve. Also, the transmission of tax cuts and the upcoming Pay Commission revision—a once-in-a-decade event—could lead to higher disposable income for PSU employees. That's actually a bigger stimulus than the ₹1 lakh tax cut we're seeing this fiscal year. So, that trend could continue well into the next fiscal. In this context, consumer durables and retail companies stand to benefit. Even building materials are currently seeing weaker growth, but as new housing construction picks up, we should see demand recover with a lag. So, I'd say these are the areas where the recent tax benefits and the Pay Commission bonanza could drive growth.
Economic Times
03-07-2025
- Business
- Economic Times
A Bala explains how dialing up risk and taking a leap of faith paid off
A Balasubramanian, MD & CEO, ABSL AMC, says with credit growth anticipated to fuel increased spending, the Indian market's high PE multiples necessitate a 'leap-of-faith' approach. Fund houses, cautiously optimistic, are dialing up risk, driven by the desire to avoid incorrect predictions rather than outright bullishness. One fund house has been successful this year by taking calculated risks. It has been a good market locally and globally. Gold, silver, Bitcoin, NAV of mutual funds, everything is at an all-time high. Where do we go from here? A Balasubramanian: It should remain positive for multiple reasons. When were you bearish last actually? A Balasubramanian: I have never been bearish. If I had been bearish, I would have never made the investment in the market. Okay, so you are bullish. Now what should one do? A Balasubramanian: The way things are shaping up with respect to international developments right from geopolitical risks to tariffs, we are seeing some kind of direction coming in, which will be more positive rather than being negative, that is one. Second, within India, the growth is gradually coming back, supported by increased government spending. There has been increased spending coming from the private sector as well. Third, the Reserve Bank of India has been fully supportive of keeping the interest rate low and they are doing everything that is possible for the financial service sector to actually improve the overall credit offtake in the marketplace as we move forward. So, if you look at the whole environment, it is helping the growth come back. Inflation largely is under control. Broadly as the spending starts coming in, we probably see the numbers for companies getting better, and therefore the earnings outlook will get better. When I look at it on a cost of capital basis, today with interest rates at where they are, the cost of capital in India is the most affordable and anybody can build a business with reasonably good predictions in terms of what kind of margin they will make in terms of ROE. So, we are in a good sweet spot. The fiscal deficit is largely under control, which again gives more room for the government in case they want to put more money in the hands of people, and that will lift the whole economy. With the recent announcement coming from the government creating first time employment, it gives some kind of income in their hands which again encourages people to seek employment and that is the way the whole momentum will get picked up. We are in the right direction and markets have already consolidated quite nicely for the last almost six to nine months and we have weathered around all the volatility that hit the world quite successfully. My own belief is India is getting a little stronger so to speak. The only risk is something, which was always there – the Chinese economy is coming back quite nicely and therefore there will always be question marks in terms of how the flows will come from overseas market to the emerging market and within that, what share will come into India. These debates and question marks will always remain, but otherwise, the domestic economy driven by domestic consumption should be the major driver. But how many of these positives are already in the price? We are just two to three odd percent away or at an index level from the all-time peak. Do you not think that this is already all baked in by the markets? A Balasubramanian: The positivity, of course, will continue. It reflects on the mutual funds, the overall participation in the equity market reflects that given the past trends that we have seen, despite all the uncertainty that came in, India behaved quite nicely from the overall market perspectives. So, that being the case, I would say, it is already priced in and to some extent is getting discounted. But still no clarity has come in terms of how the earnings will pick up. Where it stands today is, nobody wants to take a call in terms to what extent earnings will start showing an upward trend and even analyst predictions have not been very clear. Today nobody is able to gauge what the real impact will be on the interest cost saving which has been one of the lowest in the country, to what extent home loan rates will drop and therefore more demand will come. So, these predictions are not being made currently. There has been a bit of a sluggish period in auto sales. But we also need to take into account agriculture. The monsoon has been good, the rural economy continues to do very well. And the government is pushing quite a lot in terms of rural India focus and therefore all these things will actually lift the income in the hands of people. As credit starts picking up, it will increase the money in the hands of people, and therefore the spending will start coming back. This is a question of time and nobody wants to, of course, at this point of time, predict that India is still trading at 20 times, 20 times PE multiples. So, one has to take a leap-of-faith call and hope nothing goes wrong as nobody wants to go wrong. Today it is not about wanting to be bullish, it's just that nobody wants to go wrong by making wrong predictions. That is the way people must be reserving their say judgment, bullishness, and upping the earnings growth without confirmation coming from the companies themselves. But in your MF schemes, are you all in or are you still sitting on some cash? A Balasubramanian: No, cash will be about 3% to 4%. We are fully invested. In fact, as a fund house, we have been quite successful this year in terms of being bullish. I still remember my CIO equity just about eight or six months back said now the time has come to dial the risk, which is nothing but putting your leap of faith back on the table and taking a bet and that is the way we have done it as a fund house.
