Daily Voice | According to Niveshay's Arvind Kothari, the primary objective is to invest in subsidiaries in developing areas

 Daily Voice | According to Niveshay's Arvind Kothari, the primary objective is to invest in subsidiaries in developing areas

 Daily Voice | According to Niveshay's Arvind Kothari, the primary objective is to invest in subsidiaries in developing areas

Positive government policies, increased government capital spending, indigenization, import substitution, and the China plus one trend, according to Arvind Kothari, are all still prevalent, particularly in industries like capital goods, defense, electronics, and textiles.

Niveshaya's creator and smallcase manager is Arvind Kothari.

Arvind Kothari, smallcase manager and founder of Nivesaya, said in an interview that "the premiums theme in the consumer discretionary sector continues to perform well with the overall luxury market in India expected to grow 3.5 times beyond the current size to $200 billion by 2030." Is "Moneycontrol.

Investing in subsidiaries in developing industries is their main tactic.

The move toward electricity is long-term. A substation is required to step the electricity up the transmission line once a solar or wind farm is installed in the nation, and another is required to take it down for distribution. Substations will eventually be needed. With over 13 years of expertise in stock research and financial consulting, he adds that this leads to a rise in demand for power accessories, etc.

Is it reasonable to anticipate that Nifty/Sensex would provide returns of between ten and fifteen percent in the next year?

It's true that it might be difficult to forecast short-term market changes, and our main investment strategy is in small and mid-cap stocks. To put it another way, we believe there is a lot of room for development in the Indian economy. The fact that India is developing faster than any other nation in the world has not altered since COVID-19.

Positive policies from the government are responsible for India's resiliency. A few months ago, the main concerns were inflation, the downturn of the world economy, and the timing of interest rate peaks. However, with the Fed's direction to lower interest rates and the expectation of foreign direct investment (FII) money entering our nation, we should anticipate India to perform well. These days, it's all about using a stock-specific methodology to compare the sustainability of prices and profits.

Q: In the first half of 2024 or the final quarter of 2024, do you anticipate rate reduction from the Federal Reserve and RBI?

Since July, the Fed has maintained key interest rates and hinted that it would be pausing rate increases. The world economy is now experiencing a sluggish growth path, and the FED is probably going to lower rates to protect against the negative effects of this growth.

In contrast to other global economies, India's economy has grown well, and the RBI has effectively controlled inflation and growth via appropriate adjustments to interest rates. After six straight raises, he stopped raising rates, and in 2024, he plans to gradually lower rates in order to balance inflation and the present economic pace.

Which would you rather have—banks or NBFCs?

Generally speaking, we don't invest in banks or non-banking financial businesses (NBFCs). NBFCs that concentrate on certain markets, however, hold great promise due to their substantial development potential in catering to underserved societal sectors.

Which industries do you anticipate growing in 2024?

As part of our investment approach, we concentrate on high-growth industries with strong industrial tailwinds that might propel them to superior performance. Particularly in industries like capital goods, defense, electronics, and textiles, positive government policies, increased government capital expenditure, indigenization, import substitution, and China plus one tendencies are still prevalent.

Indian businesses are favoured over foreign ones as a consequence of import substitution in various areas, including the electronics and food equipment sectors, since they are more affordable and of higher quality. Our prognosis is further improved by an increase in private capital announcements in end-user sectors and an improvement in corporate loan approvals.

The two main forces behind every nation's development are manufacturing and consumption. Important factors contributing to medium-term growth include the government's dedication to sustainable development, the manufacturing sector's improvement, ongoing structural reforms, the significant presence of middle-class citizens, and a big young population that raises consumption.

The consumer discretionary sector's premiumization theme is doing well, and by 2030, the size of India's luxury industry is predicted to have increased by 3.5 times, reaching $200 billion. Our conversations with different industry participants in sectors such as real estate, electronics, cars, branded clothing, etc., have shown that consumers are more interested in high-end goods than in more reasonably priced alternatives. Other midcap and small-cap firms that potentially provide profitable investment possibilities have also shown similar tendencies.

In the next quarters, do you anticipate a re-rating of PSU banks and other PSU stocks?

Even though we don't actively invest in PSUs very often, we keep an eye on their order book, early outcomes, and businesses in the infrastructure, railroads, electricity, and defense sectors generally. to get insight into general topics such as etc. For instance, it is anticipated that top electronics PSU Bharat Electronics would increase its order book by 25% to exceed Rs 25,000 crore in FY24. This increase in the order book is beneficial to allied, smaller businesses that are essential to the PSU supply chain.

Is it the ideal moment to increase the portfolio's holdings in Power, Power Subsidiary, and Power Financing Company? In the aforementioned sector, do you notice multibaggers?

It is anticipated that the electricity industry would do well; this is not only an Indian tendency. For instance, the electricity industry is seeing a large rise in investment both locally and internationally that has not happened in many years owing to global energy transition initiatives toward renewable energy sources.

We think this is a long-term trend, with the nation's solar installation likely to reach 300 GW by FY2030 at an estimated installation rate of 40 GW year. Up till now, the country has installed around 65–70 GW of solar. In a similar vein, wind energy installations, which now stand at 42.6 GW, are predicted to increase to 100–140 GW by FY 2030, or 8–10 GW annually.

the need for power evacuation in order to construct new substations and transmission networks. It seems sense that in order to guarantee electricity supply, the government is making plans for concurrent transmission infrastructure. This would entail building more than 50,890 CKM (circuit kilometers) of new transmission lines and investing Rs 2.44 lakh crore in domestic transmission projects. The project to build a transmission line for renewable energy was categorized as a "Green Growth" priority area in the most recent budget release.

After installing a solar or wind farm, the power over the transmission line has to be increased, which calls for the installation of a substation. Finally, in order to extract it for distribution, another substation is needed. The need for power accessories and other items rises as a consequence. Our approach is to invest mostly in subsidiaries located in developing nations.