In an interview with ETMarkets, Ramkumar said: “With global headwinds, these markets could face growth challenges, whereas India has consistently posted the highest growth rates globally. This may justify our higher valuations continuing in the future,” Edited excerpts:
What a rollercoaster ride we are witnessing in the markets. The market touched record highs but is now undergoing mild consolidation, though the trajectory remains upward as all dips are getting bought into. What are your views?
The market reflects two major factors: sentiment and flows. Sentiment in India has been positive, especially with political uncertainty now behind us. India continues to lead the world in GDP growth.Additionally, the recent correction in crude prices is beneficial for inflationary expectations, supporting softer interest rates.On the flows side, mutual funds have been consistently net positive, with over Rs. 40,000 crores monthly, providing strong support to the market’s upward momentum. Intermittent FPI selling is being well absorbed, and we’re seeing quick reversals during short-term corrections.
We are seeing some volatility in the global markets, but the Indian market has largely maintained its upward trajectory, driven by strong macros and a drop in crude prices. What is your take?
Yes, that’s accurate. International crude prices have now breached the pre-Ukraine war lows from three years ago. This is highly favourable for India’s external balances and will further strengthen our foreign exchange reserves. The FMCG index has hit an all-time high, and there has been significant movement in the pharma space. Is smart money moving towards consumption and pharma stocks?
Yes, that seems to be the case. Lower allocations to these sectors in the past are now reversing. Given the smaller size of these segments relative to others, increased allocations could lead to even higher valuations.
Which segment will lead the next leg of the rally—growth or value, and why?
We anticipate softer global economic behaviour, which could impact global earnings and valuations. This creates opportunities for Indian companies reliant on the domestic economy, and we are focused on them.
There’s strong traction in new-age stocks, with growth now catching up. What are your views?
We’ve observed that giants in various segments are consolidating their market share as weaker competitors struggle due to drying start-up funding. They’ve also shifted focus towards generating EBITDA, unlike the past where turnover was the main pursuit.
These trends are visible in the few listed survivors from the start-up space, and the market is reflecting confidence in them with increased investment preference.
What about new IPO listings? Are there any sectors that could produce the next multibaggers?
The government is heavily backing the sunrise sectors of electric vehicles and solar power. There are numerous opportunities emerging in these areas. Moreover, as these sectors drive significant cost savings, individuals will have more disposable income for other discretionary spending.
How is India placed in terms of valuations compared to other emerging markets?
India is relatively more expensive than other emerging markets. However, other economies haven’t grown as robustly as India, nor do they have as strong a domestic economy.
With global headwinds, these markets could face growth challenges, whereas India has consistently posted the highest growth rates globally. This may justify our higher valuations continuing in the future.
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