Postweek Report (22 Jan — 25 Jan)
Current trends point towards a positive outlook for consumer companies and banks.
Great Indian middle class
Early last week, the International Monetary Fund estimated that India’s GDP would grow by 6.7% for the current fiscal. India’s growth is expected to rise steadily to 7.4% in 2018–19 and 7.8% in the year after, making it the fastest growing major economy. High GDP growth will push income levels up, leading to greater discretionary income and consumer expenditure.
Harsha Upadhyaya of Kotak Mutual Fund, speaking in an interview, said that consumption growth has been picking up in both urban and rural pockets. He said that across all consumption segments volume growth has been picking up and expected the same to continue in the future.
The Great Indian Middle Class smallcase consists of consumer companies expected to benefit from increased discretionary income. Buy the smallcase and benefit from increased consumption trend. The smallcase has returned 54.5% over the last 1 year.
smallcase Banking tracker
Finance Minister Arun Jaitley last week unveiled details of the recapitalisation package for public sector banks. The capital infusion plan for 2017–18 includes Rs 80,000 crore through recapitalisation bonds and Rs 8,139 through budgetary allocation. The recapitalisation package has come along with a slew of recommendations that aim to reform the banking sector.
Fresh capital infusion and possibility of further fund raising through qualified institutional placement will help strengthen banks’ balance sheets and give boost to increased lending.
Buy into Indian banking sector via smallcase Banking tracker. The smallcase is up 2.05% up this week and has returned 38.60% in the last 1 year.
The e-mobility space in India is also looking positive with major car companies ready to unveil electric vehicles in next month’s auto expo in Delhi. The government’s push to promote electric vehicles is also aiding this sector.
Read more about the Electric Mobility smallcase and an update on the markets in our latest Postweek Report.
