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Kotak Mahindra AMC says pickup in rural demand driving consumption space

Updated : August 21, 2018 06:45 AM IST

Kotak Mahindra Asset Management Company is very upbeat on the consumption space and believe that rural segment is the key driver for that.

In an interview to CNBC-TV18, Shibani Sircar Kurian, vice president and head-Equity Research, said, "For the year as a whole we would end up about 14-15 percent earnings growth on the Nifty and that is something we are getting more confident on especially after first quarter numbers."

According to Kurian, "The earnings season was better than expected and there were more hits or in-line numbers than misses. So the pace of earnings downgrade for the market would stabilise from hereon."

However, she said the overall consensus numbers for FY19 are still about 20-23 percent and so one could see some downgrades happening there as the positive base effect fades off.

Kurian said the market rally over the last month has been tremendous and so it's likely that the Nifty may consolidate.

On the interest rate front, she said, "Given that inflation trajectory is likely to moderated, we could see a pause for the time being from the RBI at least for the next policy and then later depending on how macros and global issues pan out, the RBI would look at further rate hikes."

"Moreover, demand will also continue to grow, which in turn will drive the consumption space. However, one has to be cautious and wary of certain pockets where valuations have moved up considerably," she said.

"The house is cautious and underweight on metals because there is too much cyclicality around it. Metals as a pack are likely to remain volatile, she said but within that the preference would be for non-ferrous over ferrous," Kurian added.

Kurian said the demand for two-wheelers would likely remain strong and could be a good proxy for the rural play. So, the house is upbeat on the space.

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