homemarket NewsNext important touch point for market is the 2024 Lok Sabha elections, says Bernstein MD
Next important touch point for market is the 2024 Lok Sabha elections, says Bernstein MD
Venugopal Garre's insights offer a comprehensive perspective on the Indian market's current state and the factors that investors should keep in mind. The upcoming 2024 General Elections, strong balance sheets, and sectoral allocations are all crucial elements in the investment decision-making process. While the market does face downside risks, Garre's optimism and emphasis on prudent financial management provide a balanced outlook for investors looking to navigate the Indian market in the coming months.
Lok Sabha elections in 2024 is poised to be the next most important touch point for the Indian stock market, says Venugopal Garre, Managing Director at Bernstein, a prominent investment research and asset management company.
In a recent interview with CNBC-TV18, Venugopal Garre shared valuable insights into the Indian market's current state and what investors should keep an eye on in the coming months. Garre's perspective provides a comprehensive overview of the market's landscape and highlights key factors that will shape investment decisions.
One of the first topics Garre touched upon was the significance of the 2024 general elections in India. He noted that this event is poised to be a pivotal touch point for the market.
“What is going to happen from here in my view is that, even if I take a broadly positive construct in the market, for me the next touch point is broadly elections,” he said.
Political stability and government policies have a profound impact on economic growth and investor sentiment. Investors will closely watch the election outcomes and potential policy shifts as they can influence market dynamics significantly.
Despite acknowledging the presence of downside risks, Garre remained positive about the market's overall outlook.
“I am still positive on the markets. My view hasn’t changed with respect to downside risks. So positive primarily from here means that there are limited downside risks,” he said.
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He pointed out that corporate balance sheets in India are exceptionally strong, and companies are cautious about their capital expenditure (capex) plans. This prudent approach by businesses reflects their preparedness to weather potential economic headwinds.
Garre stressed the importance of monitoring how companies utilise their free cash. With robust balancesheet and careful capex planning, companies have the financial flexibility to invest in growth opportunities or return value to shareholders. The strategic allocation of free cash will be a key determinant of a company's success in navigating market challenges.
“The only thing which we need to watch from here is how companies are going to now use the free cash,” he said.
Discussing sectoral allocations, Garre highlighted the continued overweight position in the financial sector. This overweight stance is primarily driven by large banks, which are expected to benefit from a stable economic environment and prudent lending practices. Financials remain a key driver of India's economic growth, making this sector a critical component of the investment landscape.
“My conviction in the financial sector hasn’t taken any backseat yet. That is my largest overweight,” he mentioned.
“My conviction in the financial sector hasn’t taken any backseat yet. That is my largest overweight,” he mentioned.
Garre expressed a neutral view on the auto sector, while also noting that consumption is underweight in the portfolio. This stance suggests a cautious approach toward sectors closely tied to consumer spending.
“Autos I am neutral, I do have some buy ideas but I am not looking at a large amount of returns from here,” he explained.
But, within IT space, he is overweight on consumer tech.
“The consumer tech companies, some of the new economy companies related to food delivery or even fintech, that is a key overweight for us,” he said.
For more details, watch the accompanying video
(Edited by : C H Unnikrishnan)
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