"The newly emerging Indian space sector is a noteworthy addition to the business landscape and will be a megatrend that investors should keenly observe for future wealth creation opportunities," Ajit Banerjee, Chief Investment Officer of Shriram Life Insurance Company, says in an interview to Moneycontrol.
The government is also focusing on the inclusion of private players in space missions. This has spurred Indian conglomerates and start-ups to explore space ventures, capitalising on future growth potential, he says.
Having more than 29 years of experience in the fields of investments, financial control, and management accounting, Ajit says India’s growing per capita income as well as demographics bode well for the financial sector and consumption space. The continuity of this "Jugal Bandi" is critical to creating a strong base for equity markets going ahead, he believes.
Q: Any niche themes where you have a bullish view despite the Nifty levels?
The Government of India’s emphasis on aiming towards creating a 'Atmanirbhar Bharat' has provided tremendous impetus to the large PSUs and the corporate sector, who's focus is on delivering world class products at a competitive price that is comparable to international standards.
As a sequel, we are seeing industries engaged in the production and development of defence equipment, railway stocks, power equipment, and heavy engineering witnessing a good profitable growth and catching the investors’ attention. They are further aided by lower prevailing commodity costs, which are likely to continue in the near future.
The newly emerging Indian space sector is a noteworthy addition to the business landscape and will be a megatrend that investors should keenly observe for future wealth creation opportunities. The government is also focusing on the inclusion of private players in space missions. This has spurred Indian conglomerates and start-ups to explore space ventures, capitalising on future growth potential.
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Q: Your take on clean technology space....
Clean technology has been gaining traction in India over the past few years. Several government initiatives, such as the National Mission on Electric Mobility, Pradhan Mantri Ujjwala Yojana, etc., have encouraged the growth of clean technology in India. Furthermore, various state governments are also providing subsidies and incentives to businesses to promote green energy. All of these efforts are helping India move towards a more sustainable future.
Clean technology or green technology companies in India have become increasingly important in 2023 due to the country’s increasing focus on renewable energy, sustainable development, and reducing its carbon footprint. India has set ambitious targets for reducing emissions, and its government is investing heavily in clean technology solutions.
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This has led to a strong flow of funds for investments into renewable energy sources such as solar, wind, and electricity, as well as innovations in energy storage and smart grids. However, as most of these are green field projects, the pay-back period will be longer, and therefore investors with a long investment horizon can look into this space.
Q: Do you expect the market to see a strong leg of rally if we get the confirmation about the end of rate hike cycle from the Federal Reserve?
Markets have already reconciled to the fact that the rates would be higher for longer, both at the Fed and in India. The Fed chair has made it abundantly clear that the next course of action on the rate front will be data dependent and they would like to tame inflation permanently at the 2 percent level. There is also a consensus view that rates have by and large peaked out and there is limited upside risk from here.
However, with the shift in stance in US from earlier decentralisation of goods and services, to centralisation of the same to the US and its preferred countries, it is likely to increase the cost of production and therefore lead to higher price points. Hence, getting back to the target 2 percent inflation level may take some more time.
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Indian markets at present seem to be reacting as if they are partially decoupled from US-led decisions and actions, but not entirely tethered though. The strong results in Q1FY24 and potential growth opportunities are driving the market primarily. Having said that, we also need to admit that FII inflows are also providing significant momentum for market levels to remain high, even though they're hovering at higher valuation levels than the long term averages.
Q: What are two key factors that can create the strong base for equity markets going ahead?
India’s growing per capita income as well as demographics bode well for the financial sector and consumption space. The continuity of this "Jugal Bandi" is critical to creating a strong base for equity markets going ahead.
Apart from the above, the Government of India's and the various state governments' focus on developing the infrastructure of the country as well as increasing its capex outlays will help in steering the market going ahead.
Q: Which are the two sectors that are looking over priced now?
The FMCG sector and IT sector seem to be priced at a premium compared to their long term averages. However, if we apply the bottom up approach in these sectors, we can still find some stocks that offer value picks at this point in time.
Q: Is it the right time to take exposure to AI related stocks?
It may not be an exaggerated statement to say that AI (artificial intelligence) driven applications will possibly become one of the focal points of development and growth in the IT space in the future. However, today it is still in an evolving stage. We are seeing a lot of deliberations and collaborations happening across the countries and between the lawmakers regarding creating a global framework for developing responsible and ethical AI.
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AIn India, the Central Government is considering bringing regulations to check risks from AI as part of the Digital India Act. So investing today in AI-related stocks will certainly give an early mover advantage, accompanied by the risk of a lack of complete clarity at this stage.
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Q: Which are the three key things that help you make concrete investment decisions on any stock or strategy?
The basic principle of investing doesn’t change with the underlying market conditions.
Investments should be made purely on the basis of the individual or organisation's risk appetite, i.e., the quantum of risk that the investor can sustain in the most adverse condition, or, in other words, the shock absorption limits.
Clarity on the investment horizon for which the investments can be made after assessing existing financial commitments or obligations.
The investment objective for which investments are made based on these broad principles, asset allocation decisions, investment instrument selections, and script selections are required to be made.
Needless to say, any investment decision has to be preceded by a thorough analysis by the investor or managed through a professional portfolio or fund manager, as the case may be.
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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