Utilities, industrials and auto segments could be the leaders in the market recovery in FY25, says this fund manager.

Utilities, industrials and auto segments could be the leaders in the market recovery in FY25, says this fund manager.
Descriptive text here
-

“The boost provided to revive the manufacturing sector given its domino effects on employment and the MSME segment is expected to be a big catalyst for the economy,” said Jitendra Sriram, senior fund manager at Baroda BNP Paribas Mutual Fund in an interview. Money control.

He believes that utilities, industrials and part of the auto segments could lead the market recovery in FY25.

Story continues below

Baroda BNP Paribas Mutual Fund has gradually reduced its underweighting to agrarian sectors, which was largely the position for the last three quarters, said Jitendra, with over 25 years of experience in investment research and portfolio management services. “We are currently in wait-and-watch mode for when to overweight the space at this point.”

Do you think the market will hit a new high immediately after the general election results, even though trading is now range-bound?

In our view, in the scenario of a status quo of policy continuity, we believe that the market will be largely constrained, although the initial reaction could be positive, and we await the first Budget of the new government to finally draw clues.

Story continues below

Since valuations aren’t rich, they could largely track earnings growth. If changes occur, nervousness could cause interim pullbacks forcing markets to reassess the central government’s focus areas and priorities.

Have you spotted any new opportunities across sectors, especially after recent corporate earnings?

The earnings season has largely gone as expected. However, certain key points were retained. First, the industrial sector saw widespread improvement in margins thanks to operational leverage and the normalization of raw material prices. Overall, we are seeing a slight increase in profit forecasts.

Story continues below

This was followed by areas such as IT, where growth was anemic, but margins held up and comments were of a recovery in the second half.

The third sector would be that of chemicals/agrochemicals, for which the current quarter was gloomy, but management indicates a destocking which lays the foundations for a possible recovery in the quarters to come.

Beyond the profits, the other aspect was the prediction of normal monsoons by the two leading forecasters – IMD and Skymet. This could lay the foundation for rural recovery (e.g. FMCG, tractors, etc.) after the monsoons.

Did the March quarter earnings season meet your expectations?

-

As previously mentioned, earnings season has largely gone as expected. Till the week ending May 11, nearly 37 of the 50 Nifty companies had reported and we saw 30 of those 37 come in line with or beat estimates.

Overall, for the fourth quarter, the pace is on average about 7% better than estimates. This indicates that the underlying drivers of demand are intact. Elections could potentially hit the pause button on contracting for a quarter or two, as no new tenders are usually issued after the Code of Conduct comes into force. (Source: internal and Bloomberg)

Do you add exposure to rural plays?

We are aware of the forecast for a normal monsoon and have gradually reduced our underweighting to agrarian areas, which was largely the position for the last three quarters. We are currently in wait and watch mode for when to overweight the space at this point.

Whenever we decide that there are enough indicators, to be reasonably certain, the price value equation will then dictate whether we take exposure through staples (FMCG) , agricultural facilitators (tractors, agricultural chemicals, etc. or rural income games (two-wheelers, etc.).

Which sectors are expected to take a leading position during the market recovery in FY25?

The post-Covid rebound of the Indian economy has been rapid. Tailwinds provided by policymakers through infrastructure spending (railways, power, etc.), Aatmanirbhar Bharat (import substitution, e.g. in defense), or PLI – incentives linked to production; OSAT – outsourced semiconductor assembly and test programs, etc. should give more wings to this rebound.

In our view, the push given to revive the manufacturing sector, given its domino effects on employment and the MSME segment, is expected to be a big catalyst for the economy. We believe that utilities, industrials and part of the automotive segments could be the leaders of the market recovery in FY25.

Do you think the midcap and small cap segments will remain expensive in terms of valuations in FY25?

What is expensive or cheap should always be looked at in the context of growth. From an optical point of view, the SMID (small & midcap) segments may seem a bit expensive, but these segments also show strong growth momentum. In general, the SMID space lends itself better to bottom-up stock picking, and we believe there is enough on the web via stock picking to generate alpha.

Do you think the flow and demand for retirement plans will increase in the coming years?

Retirement as a theme is bound to pick up again. India is currently a young nation, but with time, a large portion of this young workforce will age and retire. Additionally, we have seen companies and governments moving away from defined benefit plans towards defined contribution plans. Aspirations and lifestyle are constantly increasing. As these megatrends develop, the retirement sector promises to be very attractive for investors looking to increase their income through such offerings.

Disclaimer: The investment opinions and advice 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 making any investment decision.

Check out the latest business news, Sensex and Nifty updates. Get personal news, tax issues and expert opinions on Moneycontrol or download the Moneycontrol app to stay updated!

-

-

PREV The 30 Under 30 Entrepreneurs are Carving Their Own Niche in Asia’s Retail and E-Commerce Industry
NEXT Cyber ​​startup Island doubles valuation to $3 billion in $175 million Series D