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• Senior Equity Analyst at HDFC AMC, Rakesh Sethia, shares his bullish outlook on the Indian market, particularly the manufacturing sector, in the lead up to the 2024 general elections.
• Sethia’s optimism is rooted in India’s robust growth momentum, supportive pro-growth policies, and the country’s emergence as a major global consumer market.
• He advises long-term investors to stay invested in the market, highlighting the potential of sectors such as auto ancillaries, healthcare, and energy.

Rakesh Sethia, HDFC AMC’s Senior Equity Analyst, discusses the potential of the Indian market and the manufacturing sector, offering investment strategies for the upcoming general elections in 2024.

Investment Strategy for the 2024 Elections

According to Sethia, while events like elections and budgets can create short-term market volatility, India’s robust growth momentum makes it an attractive market for long-term investors. Indicators such as GDP growth, tax collections, corporate profits, banking credit, and consumption level all point towards a strong domestic growth outlook and supportive pro-growth policies.

Bullish Outlook on the Manufacturing Sector

Sethia’s optimism for the manufacturing sector is based on several factors. India’s emergence as the third largest consumer market globally has given it the scale to be a cost-competitive manufacturer. Additionally, the global realignment of supply chains, known as the China+1 strategy, allows India to emerge as a credible partner. Sethia also highlights India’s potential as the largest source of cost-effective labour supply globally in the coming decades, which could be a key enabler in labor-intensive manufacturing. The current policy framework for manufacturing, including initiatives like Production Linked Incentives (PLIs), phased manufacturing programs, and a combination of tariff and non-tariff barriers, also supports growth in the sector.

Investment Opportunities in the Manufacturing Sector

Despite high headline valuations across many sectors, Sethia believes that robust earnings growth can support these valuations. He identifies sectors such as auto ancillaries, healthcare, and energy as having reasonable valuations in the context of their projected earnings growth.

HDFC Manufacturing Fund Investment Strategy

The recently launched HDFC Manufacturing Fund will invest at least 80% of its portfolio in businesses that are part of the manufacturing theme, have a long growth runway, and are available at reasonable prices. The fund will invest with flexibility across market capitalisation.

Advice for New Investors

Sethia advises new investors that wealth creation comes from sound investment, time, and patience. He recommends choosing the right investment products that align with their financial goals and staying invested for long periods of time.

Conclusion

With India’s robust growth momentum and supportive pro-growth policies, long-term investors are advised to stay invested in the market. The manufacturing sector, in particular, offers promising investment opportunities due to its potential for long-term growth and reasonable valuations.