India remains a bright spot and we there's no dark cloud of recession on the Indian horizon, believes Sushant Bhansali, the chief executive of Ambit Asset Management.
Seasoned for over 19 years in asset management and capital markets, Bhansali foresees the Indian economy to surpass an annual growth rate of 7 percent in FY23 on the back of strong services and revival of agriculture.
On consumption, the chartered accountant says Ambit is fairly optimistic on consumption space but not overtly bullish, given a slowdown in demand and valuations shooting past long-term averages. Rural recovery remains key for the consumption space, he shares in an interview to Moneycontrol. Excerpts:
Considering the labour market and other economic data points, do you think there is no imminent recession worry?
India is the fastest-growing economy in the world, despite moderation in growth. Global recession probability has now reduced with improved labour market conditions. India remains a bright spot and we don't foresee any recession in the country.
Do you believe India will report more than 7 percent growth numbers for FY23 and similar kind of numbers for FY24 too?
India will be able to breach 7 percent growth in FY23, courtesy strong services and revival of agriculture. FY24 GDP should be able to grow at a strong 6.5 percent.
Do you expect any possibility of interest rate cut by the Fed and the RBI this fiscal?
Inflationary trends have recently cooled off and RBI projections for FY24 now stands at 5.3 percent against 6.5 percent in FY23. We believe central banks will adopt a pause before resorting to an accommodative policy stance leaving remote chances of rate cuts in 2023.
Do you think the worst is over for IT space and the upward journey in IT stocks has started just now?
IT sector fortunes are closely interlinked to global economy outlook and corporate spends. Given that the risk of global recession persists we can't say the sector is out of the woods yet. However, the situation is much better now compared to few months ago.
Do you think the FY24 will be a great year for equity markets as most of interest rate hikes are done?
Markets usually chase earnings growth coupled with benign outlook. Given the central banks agenda to tighten balance sheet, liquidity position will get curtailed in the market. In FY24, markets will be governed by earnings growth, which will be supported by margin expansion as commodity costs fall.
Are you betting big on consumption space?
We are fairly optimistic on this space but not overly bullish given demand has witnessed some slowdown and valuations are also above long term averages. Rural recovery remains key for the consumption space.
Any thoughts on quarterly corporate earnings season that is coming to an end soon? Any surprise in the earnings season and management commentaries?
Q3FY23 earnings of Nifty-50 stocks reported till now have been broadly in line with estimates. Sector-wise, metals, oil & gas and FMCG were the major losers, while banks, PSUs and IT services were the major gainers.
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