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RBI’s move to tighten lending norms for unsecured loans will shift the focus back to good quality lenders with strong franchises. Expect well managed banks to gain at the expense of aggressive NBFCs with weak franchises.
Is geo-politics driven near-shoring and friend-shoring inherently inflationary? Are we in an inflationary decade where profit pools will shift from consumer facing businesses to resources owning businesses? Not really, says Shridatta, who actually expects disinflation followed perhaps by deflation as the global economy slows down. Pricing power of strong brands will remain – no need for fund managers to underweight consumer businesses.
While ESG seems to have taken a back seat as the world scrambles to secure energy efficiency, Shridatta believes ESG as a concept is not going to go away – however the way it has been implemented – through a points system and threshold points to qualify as investible – should change toa more nuanced approach.
When asked to choose between manufacturing and consumer discretionary specially for an open ended equity fund, Shridatta says both have very strong investment arguments, but if the time horizon is 12-24 months, consumer discretionary looks relatively more attractive due to valuations as capital goods and manufacturing names have run up significantly and may consolidate for a while.
Shridatta is underweight global cyclicals – IT, commodities and metals – as he is wary of global slowdown impacting these businesses materially.
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