Pankaj Murarka, CEO & CIO, Renaissance Investment Managers
Market
The good thing is, India’s economy is fairly resilient, and we can deal with this without having any negative rub-off effect on our economy and that’s the real power. As you as all of us know, as Bill Clinton said in 1990, “It’s all about the economy, stupid”. So it’s all about economic power, which translates into all the other thing,s and the good thing is that we are a pretty resilient economy in that sense. For investors from a medium-term perspective, that whole India story still remains very much in place.
Banks
We continue to remain positive on financials as a whole. Banking is a dominant part of that, and we continue to remain positive on other parts of the financial segment, including capital markets and fintech. Within banks, our preferred holdings are or investments in HDFC Bank and Kotak Bank. Needless to say, if you own both of them, we think that both banks can start delivering industry-leading growth going forward. Clearly there is room for a valuation uptick as growth catches up in these banks. These banks have underperformed industry growth over the last two years, but we think that will change. So take a view, which is try to move medium term, we continue to remain positive on both the banks.
Consumption
We have turned positive on consumption in the last three months. With a gap of almost five years now, as investors, we have gone overweight on consumption. Our base hypothesis is that we are coming out of a pretty sharp slowdown in consumption over the last eight quarters, and aggregate consumption in the economy is at a pretty low base. The recovery and consumption will be somewhat gradual, but we see a meaningful recovery in the consumption over the next couple of years, starting from the second half of this year onwards. And it seems, after a long time, a lot of stars have aligned for consumption recovery in the economy.