ET Markets Smart Talk: India’s Consumption Story and Future Growth

Published By: ET Markets Smart Talks

Published Date: 26-10-2023

In a recent interview with ETMarkets, Ramkumar K, Chief Investment Officer at Reliance General Insurance, shared valuable insights on India's economic trajectory, highlighting the country's strong consumption story that's gradually moving into premium territory. He emphasised that discretionary consumption backed by powerful brand appeal is positioned for substantial growth over the next five years as India's per capita income continues to rise.

Addressing current market conditions, Ramkumar attributed recent volatility primarily to geopolitical tensions and increasing crude oil prices rather than valuation concerns. He advised investors to closely monitor market flows, as these ultimately determine short-term valuations while noting that election-related uncertainty could trigger additional volatility in the coming months.

Regarding portfolio strategy, Ramkumar revealed that his team has already adjusted to market fluctuations by positioning toward large caps and defensive stocks. He observed that although large-cap valuations are currently more attractive, significant shifts from small and mid-caps haven't materialised due to continued retail investment flows into these segments.

The banking and NBFC sectors were singled out for their improving returns on equity (ROE) and return on assets (ROA), indicating healthy financial performance. Regarding international markets, Ramkumar noted that while China's recent growth has exceeded expectations, the country faces challenges from global economic headwinds that domestic consumption hasn't fully offset. He specifically mentioned that retail flows continue to support small and mid-cap funds, maintaining their market strength despite some profit-taking.

Ramkumar expressed optimism about gold investments, suggesting that precious metal typically performs well during periods of currency uncertainty and geopolitical tension—conditions that characterise the current global landscape and create a favorable outlook for gold prices.