Drawing parallels to past events, he said, “One was Uri and the other was Pulwama, and the market took its stride. But the larger one was in 1999, if you remember, May to July, markets saw a 10% drawdown, but eventually MSCI India outperformed by 30%.”
Tibrewal highlighted the defence sector’s potential, saying, “Defence has been a strong performing space, not only because of the Indian geopolitical situation, but what is going on around the world.” He emphasised India’s shift from being a net importer to an exporter of defence equipment: “It’s very surprising that till a few years back, India was the net importer, and nobody ever visualised that India would also start exporting defence equipment.”
Discussing the evolution of auto ancillary companies, Tibrewal observed, “There are many auto angsts in India which are pivoting themselves from pure auto ancillaries to non-auto also.” He stated the increasing interest from global customers: “We happened to visit a few of those companies… and what we were surprised on the short flow to see many global customers around it.”
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He added, “We believe that over the next three to five years, many companies will pivot from pure auto ancillaries to non-because their precision engineering is quite good.”
Nilesh Shah, Founder and Chief Investment Officer at Envision Capital, expects market consolidation given the strong up moves in March and April.
However, he remained optimistic about the fundamentals of the economy: “The rural economy has been buoyant. Urban is expected to bounce back with lower interest rates.”
Nilesh Shah, Managing Director at Kotak Mahindra AMC, explained that the market is currently focused on the UK Free Trade Agreement (FTA), which he sees as an excellent deal. He believes this agreement will help many Indian companies expand their presence in the UK market.
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While markets typically react negatively after a conflict, he said, “Normally, the reaction post a conflict will be negative for the market, but the positive opening is obviously driven by the fact that we believe this conflict will be limited. There will be no escalation from the Pakistan side.”
For the entire interview, watch the accompanying video
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