Daily Voice: Emkay's Kashyap Javeri likes these 4 themes despite recent correction

With recent corrections in broader valuations, the markets must spend increasing efforts on what are the tailwinds available now. For one, the recent budget announcements on tax cuts and increase in KCC (Kisan Credit Card) limits can give a solid consumption boost. Second, the RBI has already thrown in the towel and cut the rates with gates open for further action down the line. Third, given good growth in HH (household) deposits and lower growth in personal loans, net financial HH savings should improve dramatically versus a low of 5.3 percent of GDP in FY23. Fourth, rural consumption should get a boost from robust kharif and rabi crops. Fifth, if consumption increases, the capex cycle on the private side should get incremental legs to grow.

On the flip side, there is still a sword hanging over the whole world about Trump's tariff tantrums. Secondly, the interest rates in the US economy are refusing to come down due to the same. Thirdly, we have our issues of how to raise employment opportunities in India.

But overall, with FII selling facing fatigue at some point in time and valuations correcting, the opportunities are weighing in favour of investors.

Do you see the possibility of another 5-6% correction from here?

Nothing is impossible. But having said that every such market correction has done two things for sure. One, bring a new flock of investors to the market and two create a 2-3 year window for making 15-20% compounded returns.

Do you see the tariff risk easing in the after part of the year?

London's weather and Trump's mood can change any time. They are as unpredictable as they can be. He was supposed to give a Valentine's day gift on the 13th to the world in the form of a reciprocal tariff but suddenly it whimpered down to just the formation of a new committee to study the tariff patterns. So we don't know how it will turn out.

Having said that it is also quite possible that the sword is being used to bring people to the negotiating table and it may turn out to be just nothing.

Which sectors are looking interesting for investment during the current correction?

Even without recent correction what we liked were discretionary spending plays, capex plays, CDMO plays and private financiers (bank or nonbank). Nothing changes.

Do you think the RBI will need to deliver more than a 50 bps repo rate cut (in addition to the 25 bps cut in February) in 2025 to boost the slowing economy?

The RBI should incrementally get much more legroom to cut the rate anyways if food prices remain under control. The core inflation has been under or around 4% for quite some time. If with great kharif/Rabi production and good sowing of vegetables, food inflation remains under control, RBI will follow up with more rate cuts.

Even as of today, the RBI is doing as much and more to boost liquidity with VRR (variable rate repo) and OMOs (open market operations).

Are you becoming more bullish on chemical stocks after the Q3 earnings, and do you expect better growth in Q4 and beyond?

Yes, incrementally specialty chemicals should do well.

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