Teji Mandi’s Vaibhav Agrawal feels that India is in a secular economic upcycle. He also believes that the country is in the early stages of a capital expenditure cycle.
The latest market correction was driven more by macro narrative and volatility than by fundamental fundamentals, according to Vaibhav Agrawal, Founder of Teji Mandi, in an interview with Moneycontrol. He also feels that “India is on a secular economic upcycle.” I also believe we are in the early stages of a capital expenditure cycle.”
When asked how he would safeguard his portfolio from a recession, Agrawal suggested investing in domestic pharma and consumer staples businesses. Excerpts from the interview that have been edited.
While the market is experiencing a huge drop and investors remain wary of risk concerns, car stocks have moved dramatically. Do you believe the car industry has priced in the most of the positives, or do you believe the rally is still ongoing?
Auto has been in a negative cycle due to both demand and supply side issues. Autos should be on the rise as demand recovers and supply-side limitations like as raw material pricing and chip shortages ease.
With a fair anticipation of a monsoon and the first decent festival season in nearly two years, cars, particularly passenger vehicles (PV) and two-wheelers, should do strongly. After nearly 5-6 years, commercial vehicles are emerging from a severe down cycle. The average fleet age is 9.9 years. As a result, the upswing might be fairly sharp.
To combat inflation, central banks throughout the world are raising key interest rates this year. However, few economists see a rate drop in the United States in 2024. Do you anticipate a similar chance in India next year?
The situation is extremely fluid and volatile. Until recently, the whole story revolved around raising interest rates and containing inflation. With some relief from inflation, the focus has switched to rate decreases.
In the event of an economic downturn, expansion is likely to take precedence. We would have to wait and see before drawing any judgments.
What industries are likely to surprise the market during the June quarter results season, which begins this week?
I believe that electricity, banking, and capex-related names can outperform.
Do you believe we are still in the bull run and the current correction is a part of long-term bull run?
Yes, I believe India is on a secular economic upturn. I too believe we are in the early stages of a capex cycle. The latest slump was fueled by macro narrative and volatility rather than basic causes. I believe it is a reversal in a long-term bull market.
Much of the FII selling in India was motivated by China’s relative posture. India’s proportional weightage has surged since China was under lockup and markets there had corrected by more than 80%. A large portion of the selling was focused on normalising that component.
What are the themes that might shield your portfolio from a downturn?
I do not believe that India will have a recession anytime soon. If you feel that is the case, I recommend investing in local pharma and consumer staples names that will be relatively untouched by a recession.
Disclaimer: The opinions and investment suggestions offered by Moneycontrol.com’s financial gurus are their own, not those of the website or its administration. Before making any investing decisions, Moneycontrol.com recommends that customers consult with professional specialists.
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