We are seeing some sheen coming back in sectors that have not been performing of late, but now it seems to be better. On the back of this, do you believe that we are now headed for a couple of weeks of only positivity on the charts? Do you believe that this up move that we have just begun to see is looking steady or sustainable?
Amnish Aggarwal: If you look at the backdrop of past few weeks, things have been moving in the positive direction whether it is the government data, whether this is news regarding monsoons, and now the interest rate cut by RBI has been better than what the markets anticipated. Now, there is some set of momentum which has now got into the market and, of course, the 4Q numbers were better than what the markets were expecting. Now that is actually, if you look at say particularly from the beginning of April till now, the markets would have rallied by roughly around high single digits, not double digit, at the index level.
So, the momentum is positive, but there could be hiccups as we go along. All the sectors or the stocks might not go the same way. We always boils down to what the numbers could be, how the things eventually could be looking at, which sectors will gain, and how the monsoon also progresses because the monsoon started two weeks or ten days before anticipation, but last week or ten days has been slightly on the weaker side.
So, I would say that the medium-term I will not go into what can happen for the next one week or two weeks, the medium-term outlook remains positive based on all the given parameters which can take the markets higher as we move along but intermittently some profit booking will continue to come in the markets.
But while we were talking about monsoon, I just want to get a further view on that point, given there are some sectors that stand to gain from monsoon like consumption, on the flip side you have sectors that stand to lose or taper down rather from the monsoons, the likes of cement, infra, real estate. What is your view on these sectors and where do you believe the next big theme could emerge?
Amnish Aggarwal: If you look at cement or infra, you see monsoon is not something which is coming for this first time. It is a yearly phenomenon. And last time also we had pretty much decent monsoon. So, to say that this year’s monsoon is going to impact cement demand, it happened even in the base year.
Now, when it comes to consumption also, I would say, the correlation of monsoon to the overall consumer demand that has diminished over the years and it is now a well-known fact that even in the years we do not have very good monsoons, it is not that your FMCG or the consumer volumes tend to decline in a very meaningful way. So, to that extent while it is positive and, in a backdrop where last year also rural India did reasonably well and better than urban India, I think monsoons are positive from the viewpoint of overall agriculture productivity, availability of goods, inflation, etc. But will it drastically alter the overall consumption demand in the country? I do not think so.
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