Emerging Markets: Indian Economy Resilient, Accumulating Stocks with Every Drop : Emkay Wealth

Any corrective downward move should be used as a long-term portfolio investing opportunity by investors as the Indian economy is resilient and has shown strength, despite weakness across the world, the company said. financial services company Emkay Wealth Management.

The same resilience can be seen in equity and currency markets, the correction in Indian benchmarks and INR has been weak compared to other emerging market peers, he said.

“Looking closer at the sales by foreign investors, you can see that a lot of it is in the large-cap space and not in the mid- or small-cap space,” Emkay Wealth Management said.

India’s latest GDP data reflects a resilient and robust economy compared to any other economy in the emerging market space, he said, adding that selling off by foreign investors has been present in all emerging markets, and the extent to which the currency has depreciated is also comparatively less in the case of the domestic economy.

The level of economic activity is better, with one of the simple signs of an increase in the level of activity. However, a significant challenge for the markets in the immediate term has been diminishing liquidity and rising rates. This policy aims to contain inflationary pressures, which can rob the economy of its efficiency and hamper growth by negatively affecting consumer demand, he said.

Emkay further added that the last recorded credit growth in India was around 18%, which is quite healthy considering that India has seen a recovery after half a decade of slow credit growth. The country will soon enter festival season, which would also help promote demand and consumption, and consumer discretionary is an area that could perform better. Consumption in the fashion and apparel sector may also look good with better earnings prospects.

The manufacturing sector is expected to perform well under various government initiatives like PLI, and also due to the opportunities presented by China plus one, and the main beneficiaries are likely to be automobiles, auto accessories, engineering companies and specialty chemicals, the brokerage says.

This is the time to focus on earnings quality, companies with strong balance sheets, leadership positions and that have demonstrated persistent business growth. These companies will have greater stability and quality even in the face of adverse conditions, he added.

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