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Investment cycle is getting on to a steadier footing as Indian economy revives.
According to Vikas Khemani, President and CEO, Edelweiss Securities, there are no two ways about it.
"We have just begun the investment cycle Public investment is already going on.
Private capex is set to take off," Khemani told ETNow.Collective investments are showing the trend.
Over the next 5-7 years, they are seen to build up to Rs 2-2.5 lakh crore.
Not just that, things are falling in place for consumption and exports.
"Over the next 4-5 years, we are going to see a fairly balanced all-round growth of investment, consumption and export.
It is a very good situation to be in from any economic perspective," said Khemani.That's rubbing off on markets as heartbeats are racing.
Both benchmark indices Sensex and Nifty are already at unheard-of levels.
Optimism seems to be back.Khemani sees two factors at work here.
"The headline index has been doing very well because of sectoral rotation and strength in corporate earnings.
Laggards like IT and pharma have picked up, helped by currency tailwind.
Corporate earnings have started picking up too," the CEO added.But he is equally mindful of the overhangs -- Iran sanctions and the general elections of 2019 -- that can throw the current market rally off-balance should expectations go awry."If the Iran sanction gets implemented, India has to be careful because oil is the single biggest risk for India.
If oil continues to remain strong and strengthens further, that will be bad for the economy affecting balance of trade and CAD.
Plus, as the market has started building in BJP's return to power in 2019 with decent numbers, a different outcome may hamper stocks severely," the top executive cautioned.
Which theme will be the king Khemani gives his vote to consumption even as humongous multiples rule.
"Derating might be the reason why investors are ready to pay higher valuation because the comfort is going there for at least next 3-4 years," he said, trying to explain his stand.He is pretty sure that demand will never go away in India.
It will continue to rock, as Khemani puts it."Demand was never a problem and demand will never be problem in a country like India on the retailing side.
That is the why some of these stocks have started doing well," said the money manager.
That tells you precisely why he is positive on most retail names that have been doing well.
