Stocks And Sweets This Diwali: Expert Picks Banking As Kaju Katli
As the festive season approaches, the Indian stock market is expected to witness a sweet run, driven by steady growth and potential interest rate cuts over the coming quarters. Harsha Upadhyaya, President and Chief Investment Officer – Equity at Kotak Mahindra Asset Management Company, shared his insights on the market, drawing parallels between market sectors and festive sweets.
Banking Stocks: The Kaju Katli Of The Market
Upadhyaya described banking stocks as the ‘Kaju Katli’ of the market, terming them dependable and all-weather favourites. This comparison is not surprising, given the banking sector’s consistent performance in recent years. The sector has been a top pick among investors, driven by factors such as interest rate cuts and the government’s efforts to boost economic growth.
IT Services: The Jalebi Of The Market
IT services, on the other hand, were likened to a ‘jalebi’ — twisted and complex in the current global landscape. The IT services sector has been facing challenges due to the ongoing global economic uncertainty, trade tensions, and the impact of the COVID-19 pandemic. However, the sector is expected to recover, driven by the growing demand for digital services and the Indian government’s initiatives to promote the IT industry.
Domestic Businesses: The Motichoor Laddus
Domestic businesses, meanwhile, are the ‘Motichoor Laddus,’ according to Upadhyaya. The domestic sector has been a key driver of the Indian economy, with the government’s initiatives such as Make in India and Digital India expected to boost growth. The sector is expected to witness significant growth, driven by the increasing demand for consumer goods and the government’s efforts to promote small and medium enterprises.
Soan Papdi: The Trickier Sectors To Navigate
Soan Papdi represents the trickier sectors to navigate, according to Upadhyaya. These sectors are expected to be volatile, driven by factors such as global economic uncertainty and the impact of the COVID-19 pandemic. Investors are advised to exercise caution while investing in these sectors, as they may be subject to significant fluctuations.
Interest Rate Cuts And GST Benefits
Upadhyaya predicted that there could be one to two interest rate cuts over the quarters, which is expected to boost economic growth. The Goods and Services Tax benefits are structural rather than one-time, and the ongoing wedding season is also expected to support demand. The wedding season is a significant driver of consumer demand, with the consumer goods sector expected to witness significant growth during this period.
Second Quarter Performance
The second quarter so far has been largely in line with expectations, with the banking, financial services and insurance sector continuing to outperform. The sector has been a top pick among investors, driven by factors such as interest rate cuts and the government’s efforts to boost economic growth. Upadhyaya noted that there’s steady growth, asset management issues have been taken care of, and valuations have corrected over the last couple of years. This space is likely to outperform, driven by the increasing demand for financial services and the government’s initiatives to promote the banking sector.
Expert Insights
Upadhyaya was joined by Dinshaw Irani, Chief Executive Officer at Helios Capital Management (India) Pvt., and Trideep Bhattacharya, Chief Investment Officer – Equities at Edelweiss Financial Services, in NDTV Profit’s Samvat 2082 discussion on how the markets are shaping up this Diwali. Bhattacharya said that India would be one of the global outperformers as compared to the rest of the world.
‘In terms of the next year, 12-18 months will be the year of consumption. With public sector pay revision and whatnot coming up. Earnings on the discretionary side look undercooked,’ he said. The Edelweiss CIO said that low double digits is the way he thinks it would go for the upcoming calendar year.
Conclusion
In conclusion, the Indian stock market is expected to witness a sweet run this festive season, driven by steady growth and potential interest rate cuts. Banking stocks are expected to be the top pick among investors, driven by factors such as interest rate cuts and the government’s efforts to boost economic growth. Investors are advised to exercise caution while investing in the trickier sectors to navigate, such as Soan Papdi. With the Diwali season approaching, investors are expected to be bullish on the market, driven by the increasing demand for consumer goods and the government’s initiatives to promote economic growth.
