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The Twitter Space Investing in Indian Consumption Story hosted by PaytmMoney. Delve into the world of trading and investing in India's consumption story with Paytm Money, the leading investment platform trusted by millions. Gain valuable insights about simplifying investments, community support, and strategic wealth creation opportunities. Explore a user-friendly experience, expert guidance, and diverse investment options available, all tailored to help investors navigate the Indian market successfully. Join a growing community of investors and unlock the potential for growth and success in the Indian trading landscape.
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Questions
Q: How many users trust Paytm Money as their go-to Investment Platform?
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Q: Why is investing in the Indian consumption story significant?
A: Investing in the Indian consumption story offers growth and wealth creation opportunities.
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A: Paytm Money simplifies investments by offering an efficient and user-friendly platform.
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A: Being in an investor community provides support, knowledge sharing, and a sense of belonging.
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A: Paytm Money provides confidence, ease of use, and access to diverse investment opportunities.
Q: What opportunities does the Indian market offer for investors?
A: The Indian market presents various investment opportunities for growth and success.
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A: Understanding the Indian investment landscape helps in making informed and strategic investment decisions.
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A: Paytm Money empowers users by providing tools, resources, and support for confident investing.
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Highlights
Time: 00:15:23
Growing Community of Investors Explore the thriving community of over 21 million users on Paytm Money.
Time: 00:25:47
Indian Consumption Opportunities Delve into the potential growth and opportunities in the Indian consumption story.
Time: 00:35:59
Simplified Investing with Paytm Money Learn how Paytm Money simplifies the investment process for users.
Time: 00:45:12
Wealth Creation Insights Gain insights into wealth creation opportunities through strategic investments in India.
Time: 00:55:36
Expert Guidance and Support Discover the expert guidance and support available to investors on Paytm Money.
Time: 01:05:44
Diverse Investment Options Explore the diverse range of investment options available to users on Paytm Money.
Time: 01:15:58
User-Friendly Investment Experience Experience a user-friendly and intuitive investment platform with Paytm Money.
Time: 01:25:01
Trusted Platform for Investments Understand why Paytm Money is a trusted platform for secure and reliable investments.
Time: 01:35:09
Strategic Investment Insights Get valuable insights into making strategic investments in the Indian market.
Time: 01:45:22
Growth Opportunities in India Explore the growth opportunities and potential of the Indian market for investors.
Key Takeaways
- Paytm Money is India's efficient Investment Platform trusted by over 21 million users.
- Understanding the significance of investing in the Indian consumption story.
- Leveraging insights to make informed investment decisions in India.
- Gaining knowledge about simplifying the investment process with Paytm Money.
- The importance of being part of a community of investors for support and knowledge sharing.
- Exploring opportunities for growth and wealth creation through strategic investments.
- Learning how to navigate the Indian investment landscape effectively.
- Discovering how Paytm Money empowers users to invest with confidence.
- Understanding the benefits of joining an established and trusted investment platform.
- Exploring the potential of the Indian market for investment opportunities.
Behind the Mic
Session Introduction
Hi, guys. Good evening. Thank you for joining today's session. Please stay connected. We'll begin in a couple of minutes. Could you also unmute for a second? Confirm if you can speak. Hi, Neeras, are you there? Yeah. Hi, Rohan. Yeah. Good evening. I'm there. I'm there. I can hear you. Yes. Perfect. Okay, let's just wait for both the MC's to join and then we'll begin. Sure.
Waiting for Confirmation
Could you please unmute for a second and confirm if you guys can speak? I've given you the speaking rights. Hello. Hi. Yes. Perfect. Can hear you. We'll just begin in a couple of minutes. So, just waiting for more people to join. Cool. Leader access team is also here. I think we can start. Yeah. Yeah. Yeah. I think. Hi, Divya. Hi, Sanchal. Can you hear my voice? Yes, I can. Wonderful. Wonderful. Okay. Hello. Hi. This is Divya here.
Event Topic and Disclaimers
Yeah. Hi, Divya. I can hear your voice. Fantastic. Yes, thanks. Thank you so much. Okay. Hello. Good evening everyone. Welcome to Patio Money's twitter space. And the topic that we are going to discuss today is investing india's consumption story. But before I start, very quickly, let me read the disclaimers for the event. Investment in securities market are subject to market risk. Read all the related documents carefully before investing. Representations are not indicative of future results. All discussions are purely educational in nature and are in no way an advice or recommendation.
Introduction of Speakers
Now, having said that, I got two very interesting speakers today. I have got Ms. Divya Menon, senior product manager, access AMC. She joined in April 24 with access AMC. Prior to that, she was with Bandhan as a senior vice president. And she has more than 15 plus years of experience in the industry. My next speaker. My next guest is Mister Chanchal Khandilwal, fund manager and senior analyst at Aditya Birla, EMC. He has more than. He is a fund manager and senior research analysts with more than 20 years of experience in the market. So welcome both of you.
Discussion Outline
Now. Thank you. Looking forward. Thank you. Thank you so much. Absolutely welcome. So now, first, let's break out the whole event today. First, we're going to talk about the market. About market as a whole. Different sectors, different industries. And then we are going to talk specifically about the consumption story which is unfolding. So, first, I'd like to start with Sanchal. In fact, you know, let's start with the market. How the market look like, you know, lots of things happening. You know, we have got, of course, geopolitics.
Market Analysis
That has been, you know, perpetual thing for last two years, two, three years, then we have got interest rate cut next, you know, fed meeting in September. So we're interest rate cut is expected and not many things are happening. Earnings season is just behind us. So what do you think the market is poised at this point of time about the economy? Can you give us some kind of a broad picture into that? Sanchal, over to you. Sure, thanks. If I were to take market in general and if I were to step back, say go back to December last year, all of us thought market was expensive.
Sanchal's Perspective
We were at a relative valuation of all time which is in line with 1617 price to multiple. But market has done so well from there. In fact I was surprised on my bull projection I am surpassing that now. Why is that happening? India? I mean election came and went. All the market is rising in and going ahead. Of all the wall of worries, what is market seeing is that in my 18 years of work life we as India is best placed in the entire global and that's what market is pricing in. If you see our market has not collected more than 5% in last one and a half years and we have been doing well.
India's Economic Position
It's because given where India is placed, when the crude is relatively low, when geopolitical tensions are relatively low india, if I may, where Modi has come back for the third time and we have a stable and consistent policy and where there are a lot of uncertainties globally and given uncertainties not just in the developing market or developed market, given what's happening in China. So all the global monies are also wanted to come back, come to India and we have seen huge participations of indian investors in terms of number of SIP increase and number of inflows, which mutual fund is seeing. So all this net, if I were to sum it up, put together, the indian story looks best ever placed and that's what market is pricing.
Market Valuation
Is the market expensive? Yes, no doubt market is expensive. But if I were to take a three to five year view, will I make money? I am 100% sure you will make money because market will climb all the wall of forays. Companies have been consistently growing at twelve to 15% and there are many companies going above that. But market is a sum of factor of all this and we are pricing in a 15 16% earning growth for next two to three years. If that plays out, a market can make great return. So I would advise investors who are coming here to come with a three to five year view and India will continue to do well.
Optimism in the Market
Absolutely. I think Sanchal has really touched upon all the points, most important points that's driving the market. And what is the status at this point of time? Very, very optimistic and good for us, good for all Indians, you know. Now again, Divya, coming back to you, coming to you. You know, Sansal spoke about that bull. Market climbs the world of worries, you know, different. So, so again, going to forward, what do you think could be major worry that could be possible, do you think a threat for the market at this point of time? Is there any trade?
Concerns and Threats
Of course, we have seen big trades in last few years. We have seen two wars started. Nothing happened. Market was intact. We have. So if at all, you see, what could that be, you think, at this point of time? Yeah. Yeah. So essentially, you know, for our indian markets, two of the most awaited domestic events, that is our election and the budget they have passed. Absolutely. And during these period, we did see some amount of volatility, but very short tenure, short duration volatility. And now markets have touched their left lifetime highs.
Positive Economic Indicators
So a lot of it which was already covered, which essentially speaks of India being on a very strong footing, macros being strong, inflation trending lower, touchwood, the monsoons also have progressed, and our economic setting seems very apt and poised for a good run for the equity markets. But yes, one also needs to be aware of some of the risks that could emanate largely from the point that you mentioned early on, geopolitical risks. That is, I think, in my opinion, one very major concern that we could be looking at, which could also lead to probably commodity prices moving up, which can lead to inflationary cycles.
Monitoring Global Factors
That is something we need to look at. We would also be eyeing the us elections going forward. So these are some of the threats that I think, or risks that I think one should be cognizant about. But nevertheless, we, India being one of the strongest economies in the world, I think for us, over a medium to long term, the story seems pretty decent. Absolutely. Absolutely. Sansal, one of the very important thing everybody is looking up to is a US interest rate cut.
Expectations on Interest Rates
So I'm sure it is more or less already taken for granted that interest rate cut will happen. So what is your expectation from there? How many points cut could be there? Number one. And number two, how the market could possibly behave from there? Is it going to really drive the market? Because some kind of study shows that when there's a interest rate hike or tighter monetary policy, then we see, in fact, market performing better and vice versa. So what do you think? How do you expect the market to perform again when Fed interest rates start happening?
Predictions on Rate Cuts
Sure. I think we are very close to the first cut which should start in September, October and then we will see series of rate cut hopefully going into next 18 months. Now when does the interest rate cut happens? When the market gets a confirmation or when the central government gets a confirmation on the inflation targeting which they were doing. The, the best part was when the interest rate was going up. People thought the economy will slow down and inflation will come down. But economy did slow down at some part, but economy didn't slow down totally.
Current Economic Outlook
So we are not seeing a hard lending, instead we are seeing a soft lending.
Interest Rate Cuts and Market Expectations
Now the best part is that now the inflation has come under control. So we will see few rate cuts going into this season. Normally we have seen that market always look 18 months, 24 months. What's going to play it out now when the interest rate cuts happen and normally interest rate cuts spreads up when there is some problem in some part of the market, right. I will do one cut, I will do second cut, but I will speed enough the cut if there is some cut, some problem emerging in some part of the market. And that remember that may emerge because of interest rate being higher for longer number of time. Was that what you are doing? You are actually making people buy capital at a higher rate and increasing the cost of capital, which is hurting someone. One will get to know only after the period of two to three years plays out.
Theoretical Benefits of Lower Interest Rates
So I believe interest rate cut is normally in a theoretical way lower interest rate cut is good for the market and markets would go up. But normally we have seen that if you see a longer term cycle 1st 2nd interest rate cut and then the market tops out. And after the interest rate cuts we don't because there is some problem in the, somewhere in the economy and that's where the market doesn't have any expectation till the interest rate cut starts. Market is expectation, interest rate cut, market that time thanks top it up and then market correct. Normally correct for some time. And then when the interest cut happens and the thing stabilizes and we realize that the pain is not as much as were expecting. Market stabilizer and then market looks at earning market over longer term is a slave of earning growth.
Continuous Monitoring of Market Metrics
So one should continuously I with the hawk, how are the companies doing, how the underlying GDP doing, how the underlying economy doing and market lies like a pendulum which swings on both the side. So that's what our belief is. But yeah, interest rate cut will happen and we should see a series of interest rate cut in the next 18 months. Wonderful. So interest rate cycle and the market behavior. But here, explain again, coming to the consumption theme that is the topic of discussion today. Hamlugna market, both sectors themes performed in the last two years, one and a half years, two years, PSU sectors defense.
Insights on Consumption Growth
Then we have got all infrastructures. In fact, consumption itself, almost 780, 90% rally ham bought nifty consumption and consumption durable indices. So again, what do you think going forward? Why you're so bullish about consumption at this point of time? We are talking about consumption growth now. What are the drivers for this particular thing going ahead? Yeah. So for us, we are very optimistic on consumption theme for a country like India. Primarily we have seen the last decade we have been, India has been one of the strongest and the fastest growing consumer market in the world, right? We have almost doubled in the last decade. Our consumer market has doubled.
Structural Changes Benefiting Consumption
There are some structural as well as cultural trends in the indian market, basically, which we think gives us a very good Runway over a medium to long term for us to believe that India is a consumer oriented market where consumption boost is going to happen. Some of these are, you know, something we have also seen playing out in our investment theme. So a GDP, if you were to break, you would break it into say consumption investment and exports oriented, right? Consumption and investment somewhere we believe go hand in hand. You know, it cannot happen that only investment is working for a country and consumption is down in the drainsd. Consumption also has to pick up, has to boost, because it's a cycle that helps both consumption and investment to boom.
Per Capita Income and Consumption Patterns
Personally or at axis, we think there are some trends that we are looking at which gives us confidence on this theme. So for example, our per capita income. So there's an economic theory that says once a country's per capita income crosses a threshold of $2,000, the next ten years, that's the next decade, shows a very good stellar growth in per capita income. And India has already recently reached that inflection point. So that gives us good confidence on how the rise in per capita income story would play out for a country like India. And that essentially means that we would have more disposable income in our hands. We are already seeing that the consumer class or the. In the retail india are now shifting more and more towards a middle or upper middle class population.
Shifts in Class Distribution and Spending
So there was a time where our country had more than half of our population in the lower income class. Today or in the next seven years, we will actually see nearly 46% of our population in the upper middle class. That also gives us a good indication of how the households are going to be very affluent in their spending. So we are already seeing the signs of it, right? We are seeing how the AC sales have happened, how Indians are traveling. Recently in today's newspaper I was reading how Indians today are taking two international trips per year. So that all shows how discretionary spends of Indians have been coupled with, you know, demographic dividend.
Working Population Dynamics
This is something that we have been hearing for a lot of time. What does it essentially mean? It means that bulk of our population is going to be, or is working population. Our median age is 28. That these individuals are going to be earning members of the family for the next 2030 years. And earning members essentially mean these people have the power to spend, they have the power to consume. So that also shows, you know, we have a very favorable disposition in the consumption space. We are playing the urbanization story. We are seeing how, you know, smaller cities are becoming now larger cities.
Urbanization and Rising Affluence
So many tier two, tier three cities are boasting of airports. Essentially, people are willing to spend on air travel, right? That also shows you how urbanization story is playing out. People are willing to buy homes. If you buy home, the whole value chain of spending, right? You need to fill your house, every room with AC. You need to have a smart tv, you need to have so many durable items in the house. The minute you buy a home, all that value chain gets triggered. So that again, is a consumption story.
Changing Consumer Preferences
We as Indians today are not happy with buying a specific branded item. We are now looking to change branded items frequently, shopping frequently. We are looking at luxury items. Whole aspect of premiumization is now embedded in the working class population. Everybody now wants to take their lifestyle one notch up from where we already are. It also shows in the kind of cars we are buying today, right? There was a time, pre Covid when usually the sedans were the top models that are, that was getting sold.
Automobile Trends Reflect Premiumization
Today, if you see the top models getting sold are either your new age vehicles like Nexon, or your suv's like Creta, Brezza, Nova. These are the top model. These are the cars that people want. So now people are not looking at, you know, something less than ten lakh to purchase. They're looking at cars beyond the ten lakh range to purchase. That, again, is a premium as ocean story that I think is a very emerging trend or an opportunity waiting to be captured indiana.
E-commerce Growth Due to Penetration
Apart from that, obviously, we are one of the economies that can boast of lower data prices. That means that the kind of penetration that e commerce can have in a tier two tier, three city is massive. That is again a play we can have culturally. I was mentioning that there are some structural trends that will aid consumption. There are some cultural trends that will aid consumption. So for example, access to credit or being comfortable with credit is another play that India is into.
Cultural Shifts and Consumption Trends
Right. Today we are more comfortable buying or taking a loan for house, for cars or personal loans. That's a cultural shift also somewhere that is playing in the consumption story. So these are some of the aspects that we believe doesn't make it a consumption story just for the next one or two years, but it actually tells you that for the next medium to long term, next decade or more, this story is there to stay. Absolutely. I think, I think you have really given a complete more 360 degree kind of a view about the whole consumption story.
Overview of the Consumption Narrative
And good that it's a long term story. It's unfolding story. And you have spoken about per capita income, rising premiumization, you have spoken about urbanization, you know, and talked about easy credit growth and our comfort that we do no longer hesitant of taking loans and, you know, spending on consumption. So fantastic. Now coming to. Now, okay, now coming to Sanchal. Sanchal. Now see, these are the different factors.
Expanding Scope of Consumption
And consumption is a very broad table. We have got not only, you know, consumer durables, but lots of things. And it has got lots of impacts as well. For example, manufacturing and other sectors as well. So which of the industries do you think that this consumption team rise in the consumption team is going to impact? Which are the other teams, peripheral teams, do you think is going to benefited out of this trend, mega trend that is emerging? Sure. Let me start by asking you know, population of India, 1.451.45 watt billion.
Significant Population Growth and Consumption
Yeah. So, and you know, the population of Malaysia or Thailand or Indonesia, example, could. It's, it's probably one 20th or 100. Okay, let me, you somewhere there. But yeah, so we are 145 crore and we would have added one Indonesia in last seven years, one Malaysia in last four years and one Thailand in last three years. Correct. This is interesting to know because when you think about the quantum of population we are adding in last seven, eight years is huge.
The Impact of Rising Per Capita Income
Right? And as my co speaker said, when the per capita income increases above $2,000, the consumption just shoots up, which is the world's largest population country today. It is done india. We have surpassed China. I mean, almost 1824 months back. What's the average age of India, if I can ask you again? Okay, 36 years. No, it's a little above. It's 29 years, 2029. Years, 29 years.
Demographics and Future Consumption
So if an average age of India is 28 29 years. And normally people marry at the age of 30 31 years and then they have a child and then they buy a house and then they buy a car. So next 1015 years, the consumption assuming that the economy is going through a phase where at one end manufacturing as a thirst is there because our prime minister realizes we need to create job for all the people who are coming in the formal sector.
Positive Economic Outlook and Consumption Growth
Assume that all the people gets a job and the economy surpasses. Then consumption is going to grow up like anything. I mean you can't even assume the consumption sector growth in next two to three decade india our average is 28. Our per capita income is going above $2,000 and we are very less urbanized. We are moving to nuclear family. People in female populist participation in the job workforce is increasing.
The Future of Consumption in India
So consumption is going to grow surpass all our expectation. Now within the consumption basket. If you were to see there is organized and unorganized. Lot of things are unorganized today. The way we buy rice, the way we buy pulses, the way you buy spices, the we buy some of the some of us buy clothing. So one shift is unorganized to organize which is going to happen. And that's when modern retail and e commerce platform is going to play out.
Trends in Retail and Consumer Behavior
The other shift is the premiumization which was against spoken by the co speaker. That journey of if I surpass a per capita income above some $10,000 I like to buy a better car. I like to do lot of travel today only in the economic times. I was reading article number of people doing two holidays abroad is increasing. People not just want to. After you earn some per capita income, where will you spend? You'll spend on better car, better holidays, better living and that's what going to play out.
The Comprehensive Consumption Basket
So consumption basket if you look at comprises of multiple things which plays out in a journey of consumers from age 28 to 40. That's the major part of the consumption. So that's where if you see the one of our fund which you mentioned is Billa Gen X fundhouse very well positioned to see where the next generation will go and spend. So where we spend in automobiles, we spend in good airlines, we spend on hotels, we then would buy houses. Then there is FMCG, which is a daily consumption.
Diverse Aspects of Consumption Growth
Then there is consumption of food. Various varieties of food from. From organized food to one. From unorganized food to organized food.
Consumer Journey and Leverage
Then there is quick service restaurants which is going to play out apart from that when we build our houses, we look at consumer durable, we look at paint, we also look to leverage. The reason leverage also plays an important role in consumer journey. How old are you if I may ask. Me? Yeah, sweet 18. I'm 45. Sweet eight. You asked me in front of everyone. I thought easily I stopped by saying sweet 18. But assume that you are age of 30 and you want to buy a car. How will you buy a car? You want to buy a car worth ten lakh. What will you do? You'll go and take a loan from a bank and buy a car. So leverage also plays an important role. So why I say leverage plays an important role in consumption. Because when you leverage, you can leverage and buy higher than what your current salary allows you. You can buy a house what your current salary allows you to buy a house worth 20 lakh. You can buy a house worth 80 lakh or 70 lakhs. Because you can leverage and buy.
Investment and Consumer Journey
So leverage also plays an important role in consumption. And that's where some companies who place the discipline of leverage well can also figure out the other thing in your journey. You will start investing in mutual fund like us. So investments will also play a critical role. You'll start buying life insurance. So all this journey of a consumer from age 25 to 45 is where consumption will happen. And these sectors are just opening up today itself. I was sitting with a health insurance company. He said my biggest problem is people in the age of 25 to 35 don't buy a health insurance. They don't think it's important, they think it's annual expenditure. But today people like you and me at the age of 40 to 50 realizes health insurance is so important, right? So that's a journey of consumer which plays out. And I think consumption is not just about FMCG, consumer durable and cars. It's much more deeper. Think about it. And that's where the India journeys play out.
India's Consumption Story
And that's where the lag of manufacturing, which Modi is trying to do, the lag of infrastructure spending. All this is facilitate the India consumption story which is just starting. Absolutely. I think both of you have given so many different aspects and completely conceptually cleared why. What is the reason? What is the driving force behind the whole consumption story? And I would like to add one from my side. What I have noticed is that after Covid and we have seen, you know, our life, we have seen through our life we have lost our relatives near and dear ones. And people started, I think realizing that instead of just saving money and it's better to invest, better to spend, better to enjoy life. I think that is, again, giving a boost to consumption. So, yes, as you said, consumption is a long term story. There are so many different sectors. Auto, you know, food and restaurant. And you talked about health insurance, which is different sectors all across different sectors.
Consumer Questions and Mutual Fund Discussion
It's going to benefit. Okay, so now even I would like to request all our listeners also, if you have got any questions, please feel free. Go ahead, ask your question in the chat box and would love to answer your questions. Okay. Now, again, I would like to come back to Divya. Divya, you have got a fund. You. You are launching a consumption oriented fund. Consumption consumption fund. Now, of course, this is a fund. There are two things. One is, as we know, that it's a long term story. It's a very robust story, and we need to be there invested. Now, should we go and pick individual stocks or we should go to a fund? In fact, not only you, right? So should we go for a fund as a lay investor? Which one is better, according to you? See, I think this actually calls upon the fundamental role of a mutual fund.
Benefits of Mutual Funds
It is actually basically what we, or a mutual fund, is trying to offer a layperson or a retail audience, an easy access to multiple companies picked up after, you know, research, hard work, complete analysis of the fundamental strength of research. And from a retail audience, you don't have to spend a large amount investing in a decent allocation in companies. You can even start investing with a nominal amount and get the benefit of a very diversified portfolio in the consumption space. So, for me, it is not a black and white area. It is very clear that a mutual fund route of investing in a theme is very apt, because essentially, like I was saying, this is an actively managed fund where the fund manager is going through all the large universe of stocks available, handpicking those stocks after research, and creating a portfolio that hopefully has a potential to generate better and, you know, superior risk adjusted return, which as an individual will not be possible with a limited time, with a limited access.
Personal Experiences in Investing
We have to information. So no doubt, a mutual fund route towards investing will be a very well-suited approach for a retail audience. Absolutely. In fact, in fact, from my personal experience as well, I'm there in the market investing for more than 20 years. And what I have realized is that as you grow older and you find that, you know, probably in your mutual fund investing, you know, it's much more stress-free, much more, you know, absolutely build a core portfolio, then me doing all the hard work, then feeling the pain when I see the market going up, but my stocks are not performing. So all this, you know, so that is what I have realized myself, that, yes, the best way to create the core portfolio is only through mutual fund.
Investment Philosophy of Consumption Fund
And now again, coming to you with another same thing question on excess consumption fund. What's the philosophy? What are the investment philosophy of your fund? So see, when we look at presenting a theme to a market, we also, at this point in time, wanted to come with a broader theme to invest in. And like my. Your voice is breaking a little. I think there's a little bit of connectivity issue. Do others have the same problem? Hello? Is it better now? Hello? Yeah, no, better. Yeah, getting better. Yeah, go ahead. Yes, sorry. So like I was saying, we wanted to look at a theme which is really very broad based in nature and not focusing on a very small segment of the market.
Scope of Consumption Fund
And that's where consumption worked for us in the sense, like my previous colleague was mentioning, it's a really broad theme. When people think about consumption, FMCG probably is the first thing that comes to their mind. But essentially, this is a very broad space that you can access. You know, FMCG is one part of it, but you have automobiles, you have reality, you have healthcare, telecom, all the consumer services and durables are also part of your consumption team. So it gives us a very broad access to the consumption theme. And being an actively managed fund, you know, we can take a call of which specific sector to be overweight on. Underweight on at axis, we have decided that we will not keep any bias to a specific market cap.
Portfolio Management and Quality Growth
We'll keep ourselves open to different market cap. So we could be large cap oriented mid cap, small cap, fungible to change our allocation across market. Captain. So that gives us a very broad access to the market. And of course, we have always been vocal about following a quality growth oriented style, which is what will also reflect here. And yes, at this point in time, we believe being very selective on the companies that we pick to create our portfolio with the kind of approach of quality and growth is what we are aiming at Axis consumption fund. Okay, so I, if I have to sum up, I can say that active management, it is going to be an actively managed fund and market capitalization it.
Market Dynamics and Future Trends
So it is a kind of a, it's a mix of all small, mid and large cap will be there, right. And, and this will be primarily on quality of the companies that you are going to choose. Okay? Absolutely, yes. Wonderful. Now, coming to Sanchal again, Sansal, let's talk about the market performance. And in last few years we have seen psus defense infrastructure have done exceptionally well. Now people are saying that evaluation has been stressed. And now compared to those themes, would you like to compare consumption performance going ahead like how the other sectors vis a vis consumption, do you expect to perform in next two to three years perspective? Sure. We always believe that the consumption is an evergreen theme.
Market Sentiment and Consumption Patterns
So see broadly from an equity market perspective, we spoke about the challenges that will have kind of repercussions on the equity market broadly. So the geopolitical issues, commodity prices, if they were to go off the charts, so on and so forth. Those obviously will have a rub off effect on the equity markets and therefore the consumption theme. But having said that, I would also want to point it out that consumption is a story which has, you know, it's not a very deep cyclical kind of a story. It is a theme that irrespective of how the macro economy or the economy projects itself, you continue to consume. That is what we saw in the COVID period also, right. Everything came to a standstill, but our consumption kind of remained intact. And that's where some aspect of consumption being kind of not as cyclical, comes into a favorable picture. But of course, it also has Matlab.
Market Dynamics and Investment Strategy
If the market falls, this also will tend to fall, but probably to a lesser extent. One very important aspect of when you're looking at themes is also to understand that these are not really very diversified, but these are kind of sectoral and thematic in nature. So they have an aspect of a theme in play. So sometimes themes work for a shorter duration. They may not work also. So you need to have that kind of a risk appetite to balance out in your portfolio. So simply put, what I'm trying to say is a diversified portfolio will give you access to multiple themes in a fund itself. But consumption will be specific to consumption theme. So there could be periods, for example, in the last two, three years, we saw that FMCG as a sector did not perform well.
Sector Performance and Market Reward
Right. So if your theme, or if your fund is much more focused on FMCG, you will see the underperformance in that theme. But some other aspect of the markets, like you mentioned, say a defense, a PSU, or an industrial segment, really outperformed, giving you 70, 80, 90% kind of a return. So those aspects, one needs to be aware of, that market does not reward all themes continuously at the same time. But some themes could underperform for short period. But like we mentioned, because we are optimistic on this theme over a medium to long term, I think with that kind of an investment horizon, one should look at investing in these themes.
Rural Consumption and Government Policies
Sanchal, again, when you talk about consumption, one of the very important component is a rural consumption and which is linked to government policies, you know. So how do you think, going ahead, the government policies will impact the consumption team india? Because we see that government, you know, doing a lot of things to improve the rural sector. The rural economy. Sure. I think going into the election, Modi and the government has realized that dual is one thing which was divided more attention than the past two regime. And that's where some of the focus going forward may go. That's one thing from a macro perspective. The second thing is that we had a really good monsoon this year, so that should play out.
Factors Influencing Rural Spending
Third is we are coming from the allocation of the budget towards the rural. We've already seen some increase and there may be more increase and rural employment. With the infrastructure spend going up, rural employment will go up. So all these four or five factors will look to improvement in rural spending, which will have a rubber effect on the FMCG spend. In fact, in last quarter, some of the FMCG companies have already spoken about green suit being seen in rural India. If that plays out, the automobile and FMCG sector can do well. And that's what we believe can play out. Okay, great.
Details of the Consumption Fund
Yeah, generally some facts about the fund. So this is an equity oriented thematic fund, like I mentioned. So predominantly large allocation to the, in the portfolio. 80% is what SEBI mandates for a thematic fund to invest in the consumption universe. So 80% to 100% will be part of the consumption related sectors. But zero to 20% is the leeway that Sebi has allowed mutual funds in thematic schemes to go beyond the consumption theme, where we really would want to play some of the allied sectors that enable the consumption story, say for example, in the BFSI space and all which are not essentially part of the consumption unit per se, but we would want them to be part of our universe being the enablers of consumption.
Investment Strategy and NFO Details
So the asset allocation model gives a zero to 20% allocation to the debt and money market instruments. The SID is also enabled to take exposure to foreign securities to the tune of zero to 35%. So that's something that the offer document allows us to. So our NFO period, Neeraj, is currently ongoing. The 6 September is our NFO closing date. And the fund managers for our access consumption fund are Shreyas Devalkar, who heads our equity fund management, and he, along with Hitesh Das, they will be managing our access consumption fund.
Investment Strategy and Recommendations
Not really. Not really. So we don't have any restrictions on number of stocks in the portfolio? Okay. Say 670 on an average is something that we foresee, probably could be the size stocks in the portfolio. Wonderful. Thank you again, Sanchal. So both of you has given a very good perspective of the whole team. The factors, the dynamics of this theme, how important to be in this particular sector, in this particular team to remain invested.
Final Thoughts on Investment
Now, what is your closing comments? What is going to be your final advice? I think we've lost Neeraj again. Once again. No, neither. I can hear you. I can hear you. I can hear you. Okay. Okay, great. So. So. Okay. So, Divya, I'll come to Sansal, then I'll come back to you again. Okay. So again, what is going to be your final advice? What's going to be your advice to our investors in terms of course, consumption as a team is and as a whole, investment as a whole, for long term, for medium term, what is going to be your final advice to our listeners?
Long-Term Investment Perspective
My final advice is whenever you're investing in mutual fund. Take a three to five year view. And don't take a view of a six month to one year where it's difficult to time the market from a six month to one year view. The consumption fin fund theme is one of the best theme which we have, and we have shown a consistent track record. This is one of the best theme. You can park your money with us. And we have seen a consistent return. This and this. As I explained you, the India story is just starting. Next two to three decade, this theme will play out. And you can look to invest further here, because I think this theme has underperformed the last one year relatively, and which will come back.
Conclusion and Gratitude
Thank you everyone. Bye bye. Thank you. Yep. So, divya, I convey Neeraj's question to you, so he's asking, what will be your final advice to our speakers? Yeah, sure. Thank you so much. So, essentially, like I was mentioning, consumption is a very broad based play, and India is poised to be a very strong player in the consumption team. And we believe that it is a medium to long term story and should form a big part of an investor, sectoral or thematic allocation.
