India Continues to Attract Investors as Top Emerging Market Destination: Expert
According to Sonam Srivastava, smallcase manager and founder of Wright Research, India is expected to maintain its appeal as the top investment destination among emerging markets for the remainder of the financial year. Srivastava attributes this to the government’s pro-business stance and highlights factors such as political stability, favorable demographics, and regulatory initiatives that are making India an attractive opportunity for investors.
While discussing the investment landscape, Srivastava emphasizes the importance of technology in investment portfolios. She acknowledges the recent challenges faced by the sector but believes that technology remains a must-have due to the ongoing digital transformation and the sector’s high margin of safety.
However, Srivastava urges caution when it comes to investing in microcaps and minicaps. These segments offer high rewards but also come with elevated risks, especially in a market where valuations are stretched. In an interview with Moneycontrol, she advises investors to focus on fundamentals rather than getting carried away by momentum and to adopt a disciplined investment approach that considers intrinsic value.
When asked about the August sales data in the auto and ancillary space, Srivastava finds the results promising. Companies like Maruti Suzuki and Mahindra & Mahindra have shown significant growth, driven by pent-up demand with the festive season approaching. However, she warns investors to remain cautious due to global supply-chain issues and semiconductor shortages.
On the industrial front, Srivastava highlights several reasons for optimism in the sector. The growing Indian economy, increased demand for industrial products, government investments in infrastructure, and improvements in the ease of doing business are driving the industrial space’s positive outlook. Initiatives like Make in India have also contributed to India’s reputation as a next-generation manufacturing hub.
When discussing the recent economic data from the United States, Srivastava believes that it is premature to conclude whether the Federal Reserve’s rate-hiking cycle is done. While economic growth is slowing, inflationary pressures remain a concern. She advises investors to be prepared for the possibility of further rate hikes, which could impact global liquidity.
In terms of sector exposure, Srivastava highlights technology as a sector that is difficult to ignore. The accelerated digital transformation has made technology a crucial expense for businesses of all sizes. From artificial intelligence to cloud computing, technology offers tremendous growth potential and a high margin of safety, making it a sector that should be considered for any well-diversified portfolio.
Overall, Srivastava advocates for a balanced and cautious approach to investing, prioritizing fundamentals over momentum. While India remains an attractive investment destination, investors should conduct thorough due diligence and focus on intrinsic value. By considering these factors, investors can navigate the current market dynamics and make informed investment decisions.