Rising Consumption, Policy Support To Drive Indian Markets: Envision Capital’s Nilesh Shah

Emerging markets, particularly India, are poised for strong performance amid monetary and fiscal changes, Nilesh Shah, founder of investment management institution Envision Capital, said on Aug. 21. Speaking to NDTV Profit, Shah outlined two key catalysts behind this drive: successful inflation management in India and policy tailwinds.

“I expect India to get into a very strong mode of outperformance. Firstly, I believe that something which has been less celebrated over the years is essentially inflation targeting and inflation management. I have never seen India's inflation level so low and especially the inflation differential between India and the developed world,” he said.

Shah added that tariff changes and proactive fiscal measures will also contribute to this growth and stressed that India’s GDP growth could even surpass 7%.

“I think a combination of these two strong developments, one on the monetary side and the other on the fiscal and on the rest of the other initiatives…..I think are going to create very strong tailwinds for India and ensure that we not just sustain at maybe the 6% or 6.5 % growth rate, but we probably nudge well past 7 % and sustain there,” he said.

Regarding the next one year, Shah emphasised it was difficult to pinpoint exact returns for such a short period. However, he advised investors to maintain a realistic outlook of 10% to 15% annualised returns over a three-to-five-year horizon.

“Over the very long term, the returns on the Nifty have been around 10% to 14%. It really depends on what you take as your base, but the broadband has been 10% to 15%, which is pretty much well above what a fixed income product or bank deposit offers you. I think that's a very reasonable set of expectations,” he added.

On consumption, he sees robust medium- to long-term growth, especially in aspirational segments fuelled by rising incomes and affordability. In the short term, measures like GST cuts and tax breaks could provide a boost, according to the financial expert.

“Some of the recent initiatives by the government, the RBI, and policymakers have been supportive of consumption. But I still believe it is rising affordability and rising aspirations that are going to be the real drivers of consumption. Demand for homes and consumer appliances should witness a strong impetus. It’s just a question of what you choose to play within that space,” he said.

Explaining his strategy, Shah underscored finding a balance between discretionary and non-discretionary segments.

“There’s a variety of choices. It’s about balancing between discretionary and non-discretionary. And within that, the big question is: do you buy the product companies, the platform companies, or the financiers? In the context we’re in today, we clearly believe that platforms and financiers are a better way to play the consumption basket than pure product manufacturers.”

The benchmark equity indices closed higher on Thursday, extending the gaining streak for six consecutive sessions. Nifty 50 closed at 25,083.75, up 0.13%, on Thursday, while the BSE Sensex advanced 142.87 points to settle at 82,000.71.