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Do you see a good opportunity to invest in the FMCG sector?
In response, he said that you will remember that in school we used to write essays on the topic 'Indian Population – Boon or Curse'. India's demographic dividend has been a boon for the FMCG sector and thus the sector continues to offer attractive investment opportunities. Despite the challenges posed by inflation and changing consumer preferences, the sector remains strong. It is being supported by growing demand especially in new areas including Tier 3 cities and towns.
He further added that the rise in disposable income in rural and urban areas as well as the growing penetration of organised retail and e-commerce is a boon for FMCG companies. These companies are well positioned to take advantage of India's growth story. He says that as a defensive sector, FMCG stocks offer stability even in a volatile market, making them an attractive long-term investment option. Additionally, the ongoing shift towards premiumisation and health-conscious products is creating new avenues for expansion.
Are you still expecting big growth in the pharma sector?
In response to this, Abhijeet said that the reality is that as a person's life expectancy increases, his lifestyle improves and stress also increases. In such a situation, demand growth will continue in the pharma sector. The pharma sector has performed exceptionally well, especially during and after the pandemic. But there is still a lot of potential for growth in this sector, although this growth will be slower than before. Focusing on healthcare infrastructure, increasing health awareness and moving towards innovation in drug development are the key growth drivers for this sector.
Moreover, the global demand for generic drugs and biosimilars is constantly growing. This is providing a strong export market to Indian pharma companies. However, the sector may face headwinds such as pricing pressure and regulatory challenges, which may slow down its growth. Investors should focus on companies with strong R&D pipeline and strong balance sheets to get consistent returns in this sector.
What are the areas you want to avoid?
There is an old saying that “lotus blooms even in mud”. The same applies to preferred stocks across sectors, even those that have not performed so well so far. Equirus Wealth believes in a bottom-up stock picking strategy. Both its PMS solutions (small cap and multi-cap strategies) are diversified by sector mix. Retail investors are advised to maintain a diversified portfolio through mutual funds. On the other hand, HNI investors would be advised to invest in stocks with fundamentals that are strong but have low valuations.
