Investors have avoided consumer stocks in recent months due to high assessments and lower margins and shifted to a more interesting alternative S Naren, Chief Investment Officer at the ICICI Prudential Asset Management Company, said correction was a potential opportunity “I think consumption will display himself as a good opportunity for us for the next three-five years because it is performing poorly and being honorable,” Naren said in an interview.
Veteran assets managers say the consumer economy will be a structural trend in India for the next 20-30 years, but predict more corrections within the near future due to rich assessments in this sector. Edited quotes The performance of the Discovery Fund value has become the best, if not the best, in its category. With interest rates tending to be higher advantage, is the value of the safest betting shares in this market even though they might be more fluctuating than saying information technology stock?
The funds were launched in 2004 and for the past 18 years, which we see is that as long as investors have a long-term orientation value, tend to do good enough with a basic tailored basis. This is not a well-functioning strategy every quarter of the quarter. Only the coat of funds in the short term has become a challenge but see it from investment logic: You are always looking for value and you try to see where there is a good gap between market prices and intrinsic value and you are willing to be patient about it. We believe the value presents interesting opportunities for the next 2-3 years.
We have our own hat on how many sectors we will buy in funds. But if you see it, at one point it will be a fund that will have the lowest battery for banks compared to others We believe that credit growth will return to the economy, but it seems that the element of ownership in banking will hurt this sector more than anything. And it is a challenge now more than anything We know that the top banks have a large surplus liquidity and liquidity will be included in credit because credit demand increases. Credit growth, usually, increases due to very high oil prices given that if you have to maintain higher oil prices, you need credit. This is our learning from the 2006-08 cycle and the 2012-13 cycle and that’s the reason why we really have taken all the banks that have a very good savings and the transaction franchise.
Around the world, the bank has not done well in the past 10 to 12 years for various reasons and I do not think something is ironic here. Actually what is more ironic is that today’s most basic consumer products on earth are telecommunications. And Telecom did it globally so we actually bought several global telecommunications shares about six months ago. The telecommunications shares, actually, it turns out to be the most defensive stock in this correction for us, and it gives me a lot of happiness because I realize that without telecommunications in the world of Covid-19, I will really be in the sea. I was very surprised why this sector did it very badly around the world, that I had the opportunity to buy something very cheap.
After credit growth increases in the economy and remains increasing for a certain period of time, if the bank with a good savings account franchise is still not done, I will worry and not vice versa. If you see three to four years, credit growth has been (so) very low so there is time when we clearly go to low weight on financial services and banks. The next few years, I think the bank will have a better time. Consumption is a structural trend for the next 20-30 years in India because you have good demographics and low per capita income. Because per capita income rises, consumption will naturally rise up. The challenge for us for a period of time is only an assessment. Every time you have a sector that has been done badly for years, in a structural room,