"There is a strong revival in real estate demand, which is benefitting both real estate developers and ancillary sectors. Hence it will be appropriate to invest in both the segments," Hemant Kanawala, Senior EVP & Head-Equity at Kotak Mahindra Life Insurance Company said in an interview with Moneycontrol.
Hemant, who boasts over 15 years of experience in the fund management industry, says there would be significant opportunities in the consumer electronics space as there is a lot of focus given by the government on manufacturing of consumer electronics to reduce imports and promote exports.
Q: Do you think the interest rate cut by RBI will take place only if the inflation goes below 4 percent?
Monetary Policy Committee (MPC) needs to balance between growth and inflation. Currently, inflation is within the band of 2 percent and 6 percent mandated to them but they are focused on achieving the neutral rate of 4 percent.
Also, India’s growth rate is around 6 percent, and is one of the fastest-growing large economies. Hence under the current scenario, MPC is likely to maintain a pause in the interest rate cycle. However, if there are any signs of deceleration in growth due to challenges in the external environment, then they may consider cutting rates even if inflation is above 4 percent.
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Q: Is it better to bet on ancillary sectors than real estate space?
There is a big shift happening from unorganised to organised sector within the entire value chain of the real estate sector. There is a strong revival in real estate demand, which is benefitting both real estate developers and ancillary sectors. Hence it will be appropriate to invest in both segments.
Q: Do you see significant opportunities in the consumer electronics space in manufacturing?
There is a lot of focus given by the government on manufacturing consumer electronics to reduce imports and promote exports. Also, Multinational companies are looking to diversify their manufacturing base away from China.
India has the inherent advantage of having large domestic demand, which makes it an attractive destination for diversification by MNC. Hence there would be significant opportunities in this space.
Q: Do you think the largecap IT sector is looking pretty constructive now?
Largecap IT companies have announced a large number of deal wins in the last few quarters, which is a confirmation of outsourcing demand from the US and Europe. However, due to uncertainty about US economic growth, there has been a delay in the execution of those deals.
Valuations have been corrected after a consolidation in the last 2 years. If there is better visibility of growth in the US, then IT spending by companies should pick up, which should augur well for the IT sector.
Q: Do you expect one more interest rate hike from the Federal Reserve but not in the September policy meeting?
Federal Reserve has indicated that they will be data-dependent for future action on interest rates. Currently, inflation is above their target of 2 percent, while the unemployment rate is below 4 percent. Hence, they are likely to maintain tightening bias in their monetary policy but it is difficult to estimate the timing of interest rate hikes.
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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