You can switch off notifications anytime using browser settings.Prospect of political stability and earning growth driving funds to India: Rupesh Patel, Tata AssetStock Analysis, IPO, Mutual Funds, Bonds & MoreProspect of political stability and earning growth driving funds to India: Rupesh Patel, Tata AssetWithin our portfolios, we are overweight on consumer discretionary as compared to staples, says Patel.Earnings growthoutlook seems to be improving as compared to what we have seen in last few years with normalisation of credit cost being one of the big drivers, said

FII flows are back in Indian equitymarkets. Is that trend here to stay for a longer term?

Since the beginning of calendar year, emerging markets as a basket had done very well in terms of . India was a funds flows. Due to uncertainty around potential election outcome, uncertainty on account of tighter liquidity environment and NBFC-related issues, India was not part of that flow. But in last few weeks or so, some of these uncertainties have started settling down as most of the opinion polls are showing that there would be stability as far as a new government is concerned and that is giving some kind of confidence to FIIs. As a result, India is finally catching up with other emerging markets peers, That is playing out in the market at this point in time.

From the longer term point of view, the very fact that the NPA cycle is bottoming out is something positive. Earnings growth outlook seems to be improving as compared to what we have seen in last few years with normalisation of credit cost being one of the big drivers. The expectation of political stability going ahead and improving outlook for earnings growth valuations have corrected from the frenzy that we saw in CY2017. All these present an attractive opportunity as far as India as a market is concerned.

How are fund managers like you navigating through election time? There is global uncertainty — be it FOMC meet, Brexit, trade war — but back home, lots of developments are taking place besides election. The rupee which is becoming one of Asias best performing currencies. Is the broader market suddenly becoming far more attractive?

Our investment approach is around three particular segments, one of which is the banking sector where I believe we are at the bottom of the NPA cycle. A large part of the problem has been recognised and going ahead, with normalisation in credit cost, banking sector earnings should bounce back very meaningfully. This should get rewarded by the market in terms of normalisation of multiples at which, some of these corporate lenders are quoting as they come out of last few years troubles which they had faced on the asset side.

The second element of our strategy is the consumption piece. We believe that India is a young country, where more than half of our population are below 25 years of age. Some of the consumer categories offer a long runway for growth.

No doubt on near term basis valuations look on the expensive side. We should be prepared to see some kind of underperformance, may be some kind of time correction in some of these names. Looking at the size of opportunity, if you are willing to live through a bit of underperformance or volatility in near term, over a longer period of time, consumption within that discretionary offers very good opportunities to make money.

The third piece is on the investment side. No doubt, the investment cycle continues to remain weak. Private sector capex is still some quarters away.

Many expert are increasingly tilting towards consumer discretionary versus staples. Is it because valuations are still very high or is volume growth also a key concern?

In our portfolio, we have reduced a bit of our exposure towards the staple side. More from the very near term perspective, the volume growth which we saw in some of these names, the benefits had come on account of reduction in GST rates. That seems to have played out and on some kind of slowdown, some managements have been indicating as well in this direction. The valuations are definitely on the expensive side. Within our portfolios, we are overweight on consumer discretionary as compared to staples.

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