Nimesh Chandan of Bajaj Finserv Asset Management Company is positive on Pharma. While the pharma index has amassed good gains this quarter, he believes pharma, hospitals, diagnostics, and CRAMS offer multi-year growth opportunity.
Among other sectors, “we are positive on online platform businesses, power infra & real estate sector. We have also reduced our underweight on IT," Nimesh said in an interview to Moneycontrol.
In the Union budget scheduled on February 1, 2025, according to him, after disappointment of Q2FY25 GDP growth numbers, the possibility of setting up a plan for the next 3-4 years for economic growth by the government has increased. An improving growth outlook either on the consumption or capex side driven by the increase in government spending augurs well for capital markets, said the investment professional with over two decades of experience in the Indian capital markets.
Do you see a high possibility of FII flows remaining negative in 2025 as well?
FPI ownership of Indian equities is at a multi-year low, so we do not expect a lot of FPI outflows in the next year. However, with the economic outlook improving in the USA (after the recent presidential elections) & China (after stimulus announcements) there is a possibility some of the global funds will reduce allocation from India and allocate to these two economies. From a long-term perspective however, India remains an attractive investment destination due to its favourable growth dynamics & demographics. It would be difficult for any FPI to miss this.
Do you foresee a challenging economic environment globally in 2025?
With growth picking up in the US and stimulus measures announced in China, the global growth outlook appears positive. However, potential challenges remain. A change in US leadership may spark discussions and actions around tariff wars, which could disrupt trade dynamics. Such developments may also lead to increased currency volatility, impacting global financial markets.
While the overall sentiment leans optimistic due to these growth drivers, geopolitical uncertainties and trade tensions could create noise and pose risks to sustained momentum. Policymakers and businesses will need to navigate this evolving landscape carefully, balancing opportunities from economic stimuli with caution against external shocks.
After the Fed's move, do you think the RBI will consider an interest rate cut only in FY26?
FOMC has signalled slower pace of future cuts in 2025. The main reasoning for the shift in policy was the higher core inflation readings of the last two months, but it looks like that some of the projections are incorporating an impact of the incoming administration’s fiscal policies in US. Even now two rate cuts expected in CY 25.
In India there is an increased trade-off between growth and inflation. Growth is already moderating while inflation is yet to moderate in coming months. In addition, external risk has come to fore post US election outcome and expected tariff regime change. Faster deceleration in food prices in January can improve the odds of February rate cuts significantly.
Do you think global growth may remain under pressure for the auto sector?
The Indian Auto sector, specifically OEMs is largely a domestic story, a few companies are operating outside India, but these are far & few. While domestic auto demand appears sluggish in the near term. Long-term drivers like premiumization & improving road infra are intact. New technologies like EVs offer tremendous growth opportunities.
Which sectors are on your radar for 2025 that should not be overlooked in a portfolio?
We are positive on Pharma. While the pharma index has amassed good gains this quarter, we believe Pharma, Hospitals, Diagnostics, CRAMS all offer multi-year growth opportunity. Along with wellness it’s one of the mega trends we believe that can offer immense opportunity in the portfolio. Among other sectors we are positive on online platform businesses, power infra & real estate sector. We have also reduced our underweight on IT.
Do you expect the Union Budget to set the direction for the equity markets, and until then, do you think consolidation may continue?
The Union budget can be the perfect platform for the central government to set things up for the next 3-4 years for economic growth. With disappointment in Q2FY25 GDP growth numbers, the possibility of such an action by the government has increased. An improving growth outlook either on the consumption or capex side driven by the increase in government spending augurs well for capital markets.
What is your strategy behind the launch of the ELSS fund now?
ELSS offers tax savings under section 80C of the Income Tax Act, 1961. It also enforces discipline among investors for long-term investments in Equities. The time horizon of investors & fund managers is better aligned. We are launching the fund now as prospective investors will finalize their tax saving allocation in the next few months. Further, the recent volatility in equity markets also offers a great opportunity to invest in good businesses at appropriate valuations.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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