Striking an optimistic note amidst many concerns on growth slowdown, Gautam says the combination of Central Government fiscal policies, RBI’s recent monetary policy decisions and State Government welfare measures will all enable growth to pick up in FY26 and accelerate in FY27.
Don’t expect the heady 20%+ earnings growth rates that we got coming out of covid, but we should expect early double digit earnings growth in FY26 and better in FY27.
Income tax cuts (Rs. 1 lakh crs), welfare measures (over Rs. 2 lakh crs) and the upcoming pay commission implementation from Jan 2026 (likely upwards of Rs. 3 lakh crs) will significantly boost discretionary consumption.
Sizeable liquidity boost that accompanied rate cuts will cushion NIM compression for banks and allow for transmission of rate cuts to borrowers – which means better volume growth prospects without threats on margin compression – good news for banks/lenders.
Non-lending financial services companies continue to benefit from ongoing financialization of the economy.
HSBC’s Business Cycles Fund is significantly invested in consumer discretionary and financials spaces to benefit from these positive cycles.
Industrials continues to be an overweight although Gautam has been trimming positions in this sector and adding consumer discretionary names. EMS within industrials is a key bright spot.
The fund has done well over the last 12 months, outperforming the broad market BSE500 TRI comfortably (7.7% vs 2.7%).
Gautam believes his call on growth pick up and positioning the portfolio to capitalize on earnings revival will continue to drive performance going forward.