With the wide array of developments happening on various fronts, investors are eyeing global, domestic, macro and corporate cues to put make the right bets. With tariff impact, potential GST cuts, and more weighing into sectors, all eyes are on the domestic demand.
Anish Tawakley, co-chief investing officer at ICICI Prudential Mutual Fund, said that are no fundamental problems in the economy. With regards to fiscal deficit, current account balance, and corporate balance sheets, he said that they are all in good shape.
What's needed is a slight pick-up in demand to drive growth, according to him. "What we need is a slight pick up in demand. Demand is an easy problem to solve. The rate cut from RBI will stimulate demand along with the GST cuts if any," he said.
Tariffs: Export Duty On Pharma, IT Needed
On the topic of tariffs, he suggests a two-ways of looking at impact. He is confident that the country has enough reserves to handle any "temporary hit" to its balance of payments.
When it comes to his unique take on how India should respond to US tariffs, his idea is that India should impose export duties on some goods.
"I think we should put some export duties on pharmaceuticals and IT services. We can collect the tariffs. Their industries will pass on the levy to the consumers. Let the Americans pay for it. We need to use the revenue from export duties to compensate the industries that need it," he noted.
Valuation, Sectoral Picks
Tawakley cautions that the markets themselves are not really cheap after a strong run over the last few years.
"We've have had a very good run as well, for the last three to four years. So, the pause is not a fundamental problem. We have been concerned about small and mid cap valuations but the large caps are broadly fine in a three-year view," he said.
Coming to sectoral picks, he highlighted his lack of confidence in staples, saying that they were over earning which is not an economic problem.
"They play is more in domestic cyclicals, that's auto, cement, some financials, industrial and capital goods. That's where we see incremental demand," he said.
Finally, for the IT sector, he says one must consider the US economy, and in his view, the US economy is more likely to weaken rather than strengthen. So investors need to watch for cues.
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