Considering the outcome of recent state elections for the incumbent government, Gaurav Misra of Mirae Asset Investment Managers believes that the government will persist with the direction it has already adopted of capacity enhancement of the economy rather than to provide ephemeral support to consumption in the upcoming Union Budget.
To support growth and investments, he expects the government to come up with more PLI (production-linked incentive) variants, support for fledgling industries such as ship building and FDI incentives in industries such as textiles and food processing.
Among sectors, "financials are a large part of our portfolio and we are overweight as well," said the Head of Equity at Mirae Asset Investment Managers who has more than 28 years of experience in investment management and equity research functions.
Are you making financials a large part of your portfolio in 2025? Which sectors are you betting on for 2025?
Financials are a large part of our portfolio and we are overweight as well. Amongst smaller sectors we are currently overweight in telecom, retail, ferrous, home improvement, etc. However, there will be a lot to monitor as 2025 progresses which will have a bearing on our bottom up stock selection and sectoral outcomes. Besides domestic and US policy stance we will have an eye on the strength of domestic consumption, rural economy, asset quality outcomes, etc.
Do you expect earnings performance to be much better in Q3 FY25 than in Q2?
Initial sense is that Q3 earnings growth rate in aggregate should improve over the Q2 levels but not significantly. This will be led by lower losses in the oil and gas sector.
Do you think the delay in the pickup of private capex may be due to global uncertainty over tariffs?
I don’t think that will completely explain the picture as India is also a domestic demand driven economy. Thus, the strength in domestic demand, monetary policy and economy will also have a bearing. Many traditionally capex intensive industries, such as metals, are also areas where the Chinese have created huge global scale over capacities.
Furthermore the nature and contours of capex in this cycle will be different from the prior cycles. This time it is being driven by sectors such as data centres, rail/metros and electronics. In the past cycle, besides metals, oil/gas and telecom were big drivers. However, I think the domestic real estate cycle and building sector will still show strength in the year ahead. Similarly I would expect more government incentives for new PLI variants and FDI to assist private capex in 2025 and beyond.
Are you super bullish on new-age companies in 2025?
These have to be looked at on a bottom up basis rather than a top down. There are too much varied businesses under the “new age” cohort ranging from quick commerce/food delivery to fintechs. Each business model is not only different but is often creating new verticals for itself. Successful execution along these vectors is what will drive outcomes.
Thus, as food delivery companies demonstrated ability to grow with improving core margins and an ability to create much against consensus views, a new vertical such as Quick Commerce, they were amply rewarded. We will continue to see similar developments in 2025. It will be important to monitor individual firms accordingly. I am hopeful that we will see more successes in 2025.
Do you expect the government to take significant steps to boost consumption and economic growth in the upcoming Union Budget?
Directionally the government will remain on a contractionary path as it has to reduce the fiscal deficit even further. This will inherently be a drag on growth and consumption. However, depending on the quality of deficit and domestic monetary policy support, the growth impulses to the economy can be sustained or even rekindled. Sectors such as infrastructure are known to have the highest multiplier effect on the economy.
Considering the outcome of the recent state elections for the incumbent government, I would think that the government will persist with the direction it has already adopted of capacity enhancement of the economy rather than to provide ephemeral support to consumption. On the other hand, to support growth and investments, I expect the Government to come up with more PLI variants, support for fledgling industries such as ship building and FDI incentives in industries such as Textiles and food processing.
Do you expect the possibility of a sharp correction in January, well before the Union Budget?
Rather than trying to time the market, it is advisable for investors to look at the markets with a longer term horizon and try to benefit from the power of compounding. The markets could have moved in any direction in the near term. However, if investors have comfort with India’s structural growth outlook than we are looking at a nominal GDP growth of say 10% per annum over the next many years. That, along with a stable and well managed macro, will provide a suitable backdrop for annual corporate earnings growth to be in the double-digit range. Given that current starting valuations, especially in the largecap, are around long period average should assist equities to do better than most other asset classes.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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