ValueQuest Investment Advisors Chief Investment Officer (CIO) Ravi Dharamshi feels that the Indian economy is actually doing very well even as US market is in throes of a massive growth slowdown and higher consumer prices.
Speaking in an exclusive interview on CNBC TV18, Dharamshi noted that during the 2017 and 2018 years, when the the world was enjoying growth, India was in a lot of pain. "If you roll back to the 2017-2018 when the US was going through fantastic growth phase, we were struggling with our domestic issues like, implementation of Goods and Services Tax (GST), demonetization, IL&FS crisis, one after the other thing, which actually destabilized the economy in the short run."
He, however, said that those things are actually acting in favour of the economy with the consistent GST collections about Rs 1.4 lakh crore. "This tells you that the engine is finally cranking up, our economy is actually doing well."
Dharamshi's comments come at a time when investors worldwide are worried that another huge interest rate hike by the Federal Reserve could tip the US economy into a recession, thereby affecting global markets.
But, on India's growth story, especially as it recovers gradually from a Covid-battered economy, Dharamshi mentioned how most of the developed countries, including US and the UK, went to print more and more money, thus leading to a sharp rise in inflation. "So, when when COVID hit, most of the world actually printed money left, right and center for various reasons, good or bad. We actually did not do that. So, not too much of demand stimulus was provided (and) we actually focused on only giving a protection to ones at bottom of the pyramid."
Despite these issues, he added, "So, that is what is actually holding us in good stead where we are not having a runaway inflation. And we had more than you know kind of 10-11 months of buffer in terms of correct reserves with RBI in terms of import. Now, that has come down to close to nine months, but I think we still have decent enough cover. "
Even though India is currently witnessing a high inflation, much above the Reserve Bank of India's comfort level of 6 percent for the past eight months - the August CPI data inched to 7 percent from 6.71 percent in July mainly due to higher food prices - Dharamshi noted that it is actually in a position to take that blow in a better position and in a better way than most of the developed world.
Thus, in terms of growth of Indian economy in the near future, Dharamshi seemed positive as according to him, the government tackled several severe issues such as preventing rupee overshoot, controlling fuel prices by provide counter cyclical measures in order to help manage balance sheets. "And the domestic cycle is improving on many fronts, from manufacturing to real estate to financial, the credit growth is coming back, " he said.
He also stated that amid such multiple factors, the country has actually positioned in a counter cyclical way to the world. "That is why despite the fact that we had $35 billion of outflow from April 21 to June of 22, we have shown this kind of resilience because the money has also flown flown from the domestic is domestic money has flown in," he explained.
Further, he mentioned that his investment company has been net buyers, however, the portfolio composition has undergone a shift from COVID-19 times. At the time of the pandemic, we were bullish on pharma, chemicals, I-T companies, but what we realised later on was there was a lot of volatile components to the growth... and these inflated profits were getting higher multiples. "We scaled down on the exposure over there and we added a lot of domestic cyclical exposure -- finacials, real estate, manufacturing auto, defence etc."
Dharamshi has been bullish on Indian markets for quite some time now. In a interview earlier with CNBC TV-18, the CIO of Value Quest Investment Advisors had stated how he was very resilient for the past one year despite all the negative macros which indicated that one has to be little nuanced in their views about what inflation might mean in the US and its context in India.
Meanwhile, Indian shares ended higher on Monday, lifted by gains in financials and auto companies, while investors prepared for a host of central bank meetings this week to gauge the impact of rate hikes on global economy.
At closing, the NSE Nifty 50 index rose 0.5 percent to 17,622.25 and the BSE Sensex ended up 0.5 percent at 59,141.23. Both the indexes had lost over 1.5 percent last week.
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