As India extends the world’s strictest lockdown to tackle the new coronavirus pandemic, Kotak Mahindra Asset Management Company Ltd.’s Harsha Upadhyaya said the consumer goods makers would be less affected in terms of growth.
“Over the next few quarters, given that discretionary consumption is likely to be lower, investors will favour in some of these essential goods or related categories. The relative impact of this slowdown is going to be lower for these segments,” the chief investment officer-equity at the Rs 1.86-lakh-crore manager of mutual fund schemes. “Even at expensive valuations some of these stocks may find place in portfolios.”
Prime Minister Narendra Modi extended the lockdown through May 3 as India stepped up its fight to contain the virus spread among its 1.3 billion citizens. Besides sale of essentials, the government allowed select activities after April 20 to kick-start the economy. But sale of non-essential items are strictly prohibited during this period.
Other highlights from the interview:
- Expects other pockets in the economy to be much stronger than IT sector
- India is relatively better placed and so domestic industries will do much better than those linked to global growth
- In a situation where the economy is slowing and there is pressure on the financial system, cost of credit will go up and NBFCs will face a lot of hurdles
- The segment was already facing an issue of asset liability mismatch; continue to remain circumspect on this segment and don’t have much position here
- Gradually investing into stocks where he likes fundamentals and valuations
- Though markets are estimating recovery from second half this year on the assumption that lockdown will get lifted and activity will resume, there will be volatility in the market on the downside if there is change in these assumptions
- The more time it takes to resume normal activity, the impact is going to be non-linear. That’s where investors have to be really careful in taking bets