Engineering and capital goods continue to be favourable investment sectors in the emerging market of India, according to an Indian portfolio manager.
The value of buying stocks in engineering stems from the nations seemingly never ending need for a vast number of infrastructure projects to services its population of around 2.1 billion people, State Bank of India Funds Management equities manager Aashish Wakankar said.
“The key thing to understand about India is that the infrastructure capacities that are being created today are not for tomorrows demand but for yesterday’s demand,” Wakankar said.
“So all of these capacities that are being created have already got consumers waiting in a queue to lap it up.”
Meanwhile, India’s expanding middle class is driving consumerism to new high levels which makes the capital goods sector a popular investment choice.
“In the year 1998 we had nearly 70 million televisions in the country, but as we speak today we’ve already passed 115 billion televisions,” Wakankar explained.
The banking and finance sector was another where Wakankar’s portfolio is overweight.
“India continues to be an underpenetrated country in this area. We are expecting growth rates of two to three times of the normal GDP growth rate in the future,” he said.
Furthermore, he predicted another sector that would show continued growth was telecommunications.
“The telecommunications sector is again a play on the domestic consumption story and the huge amount of growth it offers,” Wakankar said.
Retail investors can gain access to State Bank of India Funds Management through the multi manager Fiducian India Fund which was launched in October last year.
