Latest news with #ShreyasDevalkar
Time of India
5 days ago
- Automotive
- Time of India
Positive on auto, expect rate cuts to revive PV, two-wheeler sales: Varun Goel
Varun Goel , Senior Fund Manager, Mirae Asset Investment Managers , says the auto sector is poised for growth due to monetary easing and anticipated rate cuts, which are expected to lower EMIs and boost sales in both passenger car and two-wheeler segments. A positive monsoon is favoring tractor companies, while premium motorcycles and SUVs continue to thrive due to the ongoing premiumization trend in the Indian market. What is your view on the entire auto pack? Lots have happened with Nifty Auto on Tuesday. It is the top sectoral gainer. Hero Moto has been outperforming the market. Plus there was Tesla's entry into India with a Mumbai showroom. Where do you see auto as a pack headed? Varun Goel: As far as auto is concerned and for that matter other various cyclical sectors, the growth outlook should get better because of the significant monetary easing that we have seen so far this financial year and with inflation data continuing to remain benign, we expect further rate cuts in the future. Our view is as EMIs are reduced both for home loans and auto loans, the auto sector should benefit. We expect a revival in sales as far as the passenger car industry is concerned. Even on the two-wheeler side, sales growth should improve as we approach the festive season. We like companies in the tractor space considering that the monsoon continues to be good. The higher-end motorcycle and SUV spaces also continue to do well as the premiumisation story in the Indian vehicle market continues to play out. So, we maintain a constructive stance on the auto space going forward. The other pocket that is doing well is the chemical pack and Rallis India came out with a very good set of numbers. What is your analysis on the chemical pack because, of late, a lot of these stocks are showing momentum but do you like any particular pocket within that? Varun Goel: As far as the chemical sector is concerned, we have seen almost three years of down cycle. Post Covid, the Chinese supply came back in a very significant manner because of which there was pressure both on realisations and volume growth. Incrementally, we would be more positive on specialty chemical names. Companies which are in the battery chemical space and which are focusing on creating electrolytes and other battery related chemicals, is a niche theme that is expected to do well. Some of the water treatment and purification related chemicals is also a theme which looks interesting and so we would be positive on the sector in a selective manner. You Might Also Like: Don't peg your expectations from market too high; look for growth stories: Shreyas Devalkar Q1 earnings trend so far does not point to big growth recovery this quarter: Ashi Anand
Time of India
5 days ago
- Business
- Time of India
Don't peg your expectations from market too high; look for growth stories: Shreyas Devalkar
Shreyas Devalkar , Head-Equity, Axis MF , says the market currently favors established narratives, making them costly. Opportunities arise in sectors experiencing growth, such as manufacturing and import substitution . The government's Make in India initiative is boosting domestic production. Tourism and retail are also performing well. Private sector banks and NBFCs show potential for revival with lower interest rates. What is your take on the Indian markets because the Street is a bit divided? Some believe that a lot of these positives are already factored in and the valuations are expensive. But some also have the view that a lot of these positives are still to be factored in with respect to RBI rate cut, the tax cut, and India-US trade as well wherein India is expected to be in a sweet spot. Where is the market headed from these levels? Shreyas Devalkar: As far as the market is concerned, wherever there is an established story, it is always expensive. There are pockets where the stories are really established. You spoke of three aspects, the US tariff on India, the credit and the interest rate part and earnings. When it comes to the US tariff part, we have to see how it evolves, especially as it is not only about India versus US, but also India versus China, and other competing countries where they also have a comparative advantage. In such a situation, we need to wait and watch not only the tariff on India, but also on all these countries so that the end game is established. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like An engineer reveals: One simple trick to get internet without a subscription Techno Mag Learn More Undo The way it looks, as of now, the market has tried to factor in certain gains in some aspects. So when it comes to established stories like electronics, manufacturing, services, there is a shift from China to India. The second part is the Make in India theme where we are trying to build in India and trying to reduce import dependence. It can be in solar, and is actually in multiple parts and sub-parts of even consumer durables. The government has taken multiple steps in that. Another part that is growing very well is manufacturing. Such stories are emerging very nicely and there the valuations definitely remain high. So, these stories are in capital goods, power sector, capex, and EMS, and here we are driving import substitution. On the other hand, in consumption, they are in tourism, travel and retail. Some of the retail stories are doing extremely well. These are the segments which continue to do well and where the valuations are high. We need to bear with it. As long as the growth delivery remains, the valuation may sustain. There are pockets where valuations are not that high and there is expectation of revival and that is one of the aspects which you highlighted on the credit and the lower interest rate. Live Events You Might Also Like: Q1 earnings trend so far does not point to big growth recovery this quarter: Ashi Anand There, the private sector banks' valuation has not got re-rated compared to pre-Covid days. In some cases, there is a de-rating also. Overall, NBFC valuation is broadly similar to pre-Covid days' barring a few cases here and there because of the slowdown in credit growth as well as deposit growth. Obviously these are the reasons why it has happened. Now, with lower interest rates and better transmission, one may see some revival there. But would you be comfortable putting fresh money to work at this level right now? Shreyas Devalkar: As a long only investor, we end up investing. So, even if you do not end up putting in fresh money, whatever you own is as of yesterday's price. That is the way we look at it. So, from the point of view of the investors, the market has gone up substantially. Over a longer period of time, the market has given returns closer to nominal GDP growth and one should set right expectations from the returns from the equity market rather than expecting too high returns which has been the case in '22, '23 and '24 because there is a substantial re-rating in the stories. So, from that re-rating, a very high return is difficult to expect and on the other hand there are certain segments where we need to see some revival in growth to get a good return. Otherwise, the right return expectation is important here. In your latest fact sheet, you have mentioned that while our overall macros look good, we are not completely out of the woods yet. In light of the recent CPI numbers which have been much better than what the Street was expecting, overall macros in terms of liquidity are looking good. Where are you still expecting to see some more momentum in order to say that a broad-based recovery in macros is seen? Shreyas Devalkar: As far as overall growth for the economy is concerned, if you take the last two decades, it was on the back of three things. One was monetary policy and that is in favour. As of now, we are seeing interest rates coming down. We are seeing that getting transmitted also by various banks and NBFC. So, its impact will be seen. You Might Also Like: Aditya Khemka on US tariff threat over pharma and what to bet on there The other aspect has been seen at multiple points in time in multiple countries – fiscal expansion. Now, there is fiscal consolidation. So not only India, most other countries are trying to do it. But fiscal consolidation has a certain impact on growth. More importantly, the third aspect is the export growth because for a large part of listed companies, especially in largecaps, there is an element of export directly or indirectly and that is where whenever the global economy is doing very well, there is a positive impact on the Indian economy. So, out of these three factors of growth, monetary policy is definitely in favour, interest rates because of the inflation coming down will also drive better growth for us. But because of the fiscal as well as the global growth not being there, the overall recovery in growth may not be as expected. So one should look at it in a more pragmatic manner as far as growth is concerned. Help us understand what sort of portfolio changes have you made of late because in your fact sheet, I believe you have reduced your weightage in autos while adding a bit more into consumers. How do you manage this positioning right now? Also, any sectors you will closely watch for increasing weightage? Shreyas Devalkar: Wherever there is growth and wherever there is earnings cut, these are the two aspects one ends up trying to predict. So, both auto and auto ancillaries have seen earnings cut both because of the global and local environment. That is where over five-six months, we have reduced our exposure. You Might Also Like: Nischal Maheshwari on 2 sectors where we may see rays of hope in market At the same time, despite high valuations, some of the capital goods companies, especially in the power space, have done better on the growth front. So, it is not broad-based capex as such, but definitely there are certain segments of that, segments of electronic manufacturing, import substitution, and all these in the overall capital goods space. There are multiple companies here and in that context, we have increased some exposure to that segment. As far as consumption is concerned, exposure to some retail companies was increased over the last five-six months as it is reflected in the fact sheet.
Economic Times
5 days ago
- Business
- Economic Times
Don't peg your expectations from market too high; look for growth stories: Shreyas Devalkar
Shreyas Devalkar, Head-Equity, Axis MF, says the market currently favors established narratives, making them costly. Opportunities arise in sectors experiencing growth, such as manufacturing and import substitution. The government's Make in India initiative is boosting domestic production. Tourism and retail are also performing well. Private sector banks and NBFCs show potential for revival with lower interest rates. ADVERTISEMENT What is your take on the Indian markets because the Street is a bit divided? Some believe that a lot of these positives are already factored in and the valuations are expensive. But some also have the view that a lot of these positives are still to be factored in with respect to RBI rate cut, the tax cut, and India-US trade as well wherein India is expected to be in a sweet spot. Where is the market headed from these levels? Shreyas Devalkar: As far as the market is concerned, wherever there is an established story, it is always expensive. There are pockets where the stories are really established. You spoke of three aspects, the US tariff on India, the credit and the interest rate part and earnings. When it comes to the US tariff part, we have to see how it evolves, especially as it is not only about India versus US, but also India versus China, and other competing countries where they also have a comparative advantage. In such a situation, we need to wait and watch not only the tariff on India, but also on all these countries so that the end game is established. Aditya Khemka on US tariff threat over pharma and what to bet on there The way it looks, as of now, the market has tried to factor in certain gains in some aspects. So when it comes to established stories like electronics, manufacturing, services, there is a shift from China to India. The second part is the Make in India theme where we are trying to build in India and trying to reduce import dependence. It can be in solar, and is actually in multiple parts and sub-parts of even consumer durables. The government has taken multiple steps in that. Another part that is growing very well is manufacturing. Such stories are emerging very nicely and there the valuations definitely remain high. So, these stories are in capital goods, power sector, capex, and EMS, and here we are driving import substitution. On the other hand, in consumption, they are in tourism, travel and retail. Some of the retail stories are doing extremely well. These are the segments which continue to do well and where the valuations are high. We need to bear with it. As long as the growth delivery remains, the valuation may sustain. There are pockets where valuations are not that high and there is expectation of revival and that is one of the aspects which you highlighted on the credit and the lower interest rate. There, the private sector banks' valuation has not got re-rated compared to pre-Covid days. In some cases, there is a de-rating also. Overall, NBFC valuation is broadly similar to pre-Covid days' barring a few cases here and there because of the slowdown in credit growth as well as deposit growth. Obviously these are the reasons why it has happened. Now, with lower interest rates and better transmission, one may see some revival there. ADVERTISEMENT But would you be comfortable putting fresh money to work at this level right now? Shreyas Devalkar: As a long only investor, we end up investing. So, even if you do not end up putting in fresh money, whatever you own is as of yesterday's price. That is the way we look at it. So, from the point of view of the investors, the market has gone up substantially. Over a longer period of time, the market has given returns closer to nominal GDP growth and one should set right expectations from the returns from the equity market rather than expecting too high returns which has been the case in '22, '23 and '24 because there is a substantial re-rating in the stories. So, from that re-rating, a very high return is difficult to expect and on the other hand there are certain segments where we need to see some revival in growth to get a good return. Otherwise, the right return expectation is important here. ADVERTISEMENT In your latest fact sheet, you have mentioned that while our overall macros look good, we are not completely out of the woods yet. In light of the recent CPI numbers which have been much better than what the Street was expecting, overall macros in terms of liquidity are looking good. Where are you still expecting to see some more momentum in order to say that a broad-based recovery in macros is seen? Shreyas Devalkar: As far as overall growth for the economy is concerned, if you take the last two decades, it was on the back of three things. One was monetary policy and that is in favour. As of now, we are seeing interest rates coming down. We are seeing that getting transmitted also by various banks and NBFC. So, its impact will be seen. ADVERTISEMENT The other aspect has been seen at multiple points in time in multiple countries – fiscal expansion. Now, there is fiscal consolidation. So not only India, most other countries are trying to do it. But fiscal consolidation has a certain impact on growth. More importantly, the third aspect is the export growth because for a large part of listed companies, especially in largecaps, there is an element of export directly or indirectly and that is where whenever the global economy is doing very well, there is a positive impact on the Indian economy. So, out of these three factors of growth, monetary policy is definitely in favour, interest rates because of the inflation coming down will also drive better growth for us. But because of the fiscal as well as the global growth not being there, the overall recovery in growth may not be as expected. So one should look at it in a more pragmatic manner as far as growth is concerned. Help us understand what sort of portfolio changes have you made of late because in your fact sheet, I believe you have reduced your weightage in autos while adding a bit more into consumers. How do you manage this positioning right now? Also, any sectors you will closely watch for increasing weightage? Shreyas Devalkar: Wherever there is growth and wherever there is earnings cut, these are the two aspects one ends up trying to predict. So, both auto and auto ancillaries have seen earnings cut both because of the global and local environment. That is where over five-six months, we have reduced our exposure. ADVERTISEMENT At the same time, despite high valuations, some of the capital goods companies, especially in the power space, have done better on the growth front. So, it is not broad-based capex as such, but definitely there are certain segments of that, segments of electronic manufacturing, import substitution, and all these in the overall capital goods space. There are multiple companies here and in that context, we have increased some exposure to that segment. As far as consumption is concerned, exposure to some retail companies was increased over the last five-six months as it is reflected in the fact sheet. (You can now subscribe to our ETMarkets WhatsApp channel)
