Indian stock markets are entering a consolidation phase, and it may not necessarily be a negative reaction despite the ongoing uncertainties and the global turmoil over US tariffs, according to Kenneth Andrade, founder and chief investment officer at Old Bridge Mutual Fund.
Speaking to NDTV Profit on Mar. 12, Andrade suggested that the global and domestic landscape is evolving. He added that a significant capital expenditure (capex) cycle is about to take off, which could be beneficial as the market begins to position itself to benefit from this upcoming supply chain shift.
“The market is consolidating, and we’re probably a year away from this consolidation. Despite some incremental bad news, I don’t expect a negative reaction. You will have struggling domestic macros, but I think that a massive global capex cycle is around the corner, not just in India but worldwide, and developed markets are starting to put money to work. The opportunity lies in how we position within the supply chain,” the ace investor said.
Citing the example of the tech boom, or commodities cycle, driven by China, Andrade explained that for India to participate in a capex cycle, there needs to be a global shift in capital towards a specific industry or segment. “While consumers are not reducing volumes, they are shifting from aspirational to affordable products. With inflationary pressures, this ‘downtrading’ trend will likely remain sticky for a while…” he said, while addressing the concerns around reduced consumer spending in India.
Elaborating on why this trend will likely persist for a while, he added, “When income just matches inflation, there’s no increase in spending power. In India, people aren’t reducing consumption but shifting preferences from aspirational to affordable products. This ‘downtrading’ is the sticky cycle we’re in.”
He further noted that broader economic trends, with governments expanding their balance sheets, point to potential opportunities for stock picking. According to the asset management expert, investors should focus on companies in industries that are currently at a “low point” in their cycles, as these may present better chances for growth.
When asked about sector-specific opportunities, he said, “I am not the first to say it, but governments are expanding balance sheets, and that’s the direction to focus on. For stock picking, we prefer businesses at the lower end of their industry cycles. Growth is limited in many sectors, so we’re focused on long-term potential. We’ve had a large weight in pharmaceuticals and commodities, and now, with relevant data, we see a long cycle ahead. Basic commodities and engineering may see an uptick, but their valuations are stretched.”
. Read more on Markets by NDTV Profit.Kenneth Andrade, Founder and CIO, Old Bridge Mutual Fund predicted that a significant capital expenditure cycle is about to take off, which could be beneficial for the Indian market. Read MoreMarkets
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