The deficient monsoon could delay the much-anticipated revival of rural consumption in India, says Harsha Upadhyaya, President & CIO – Equity at Kotak Mahindra AMC.
Sharing his thoughts on several key developments affecting the Indian financial landscape in a recent interview with CNBC-TV18, Upadhyaya said that this delay in the revival of rural consumption could have implications for various sectors, including agriculture and rural industries. Because, these sectors are heavily rely on adequate rainfall for growth.
“It is almost 7 percent deficiency now compared to the normal monsoon season. When we witnessed more than 6 percent deficiency, we have seen some temporary impact on food equation and also on food availability and rural consumption,” he said.
Addressing the investment landscape, Upadhyaya emphasised the importance of caution. Despite the positive developments in the economy, he advises investors to remain cautious on midcap and smallcap stocks and favor largecap stocks.
“We continue to remain little cautious on midcap and smallcaps at this point of time. Overall on the markets, we continue to remain constructive but within the equity markets, we would rather prefer largecaps at present,” he said.
Regarding specific investment decisions, Upadhyaya mentioned that they have recently booked profits in select private financial companies.
“We have booked some profits in the financials over the last few months,” he said.
One of the other important highlights of the interview was Upadhyaya's optimism about the inclusion of Indian bonds in JPMorgan's Emerging Market Index.
"Definitely, it's a very positive move for the Indian economy and fundraising," he said about the Indian bonds' inclusion in the JPMorgan's EM Index.
According to Upadhyaya, this inclusion will lead to a decrease in the cost of funds and an increase in the availability of resources for Indian corporates and the government.
Furthermore, Upadhyaya anticipates a substantial influx of funds into India as a result of this inclusion. He mentioned, "We are likely to see upwards of $20 billion in the first year itself." This significant capital injection is expected to enhance the resilience of the Indian economy by reducing currency depreciation risks.
For more details, watch the accompanying video
(Edited by : C H Unnikrishnan)
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