After two bad years, expectations of good monsoon should spell good news for the Indian economy while rural consumption had been very sluggish because the two years of suboptimal rains and urban consumption remains reasonably steady and strong, said Vineet Sambre, Vice President and Fund Manager of DSP Blackrock.
While speaking with the mediapersons on Thursday, Sambre said that good consumption in India typically has a good effect on the GDP growth rate. And that trend will be no different this year thanks to likely to good rains in the month ahead. We also had a fairly good credit policy which may pave the way for lower interest rates.
Companies within speciality chemicals and textiles have improved their competitiveness. Global customers are incrementally looking at Indian players due to reliability and quality factors. This is lending better visibility of earnings to these companies for which investors are ready to assign a higher multiple. Similarly, the banking sector in India is undergoing a painful phase but we observe that some of the NBFCs have managed to show decent growth while maintaining the quality of the book. This has led to significant re-rating within this space, he added.
Expressing optimism, he said, “We are entering into a better earnings cycle. We are seeing clear evidence of a pick-up in activity on the ground. Interest rates are also expected to tread lower. All these factors make us positive on the long term trend of equities. There could be considerably volatility though, mainly due to external factors.”