Rupee weakness not a concern; domestic economy on strong footing
Tawakley dismissed concerns over rupee volatility, stating that India’s current account remains healthy and recent fluctuations stem mainly from capital flows, not economic weakness.
He added that gold imports—which have increased the deficit—behave more like capital outflows, not consumption, reducing structural risk.
“There is a strong case for defending the rupee. The current account reflects reality, the capital account reflects market sentiment,” he said.
Portfolio positioned toward domestic cyclicals
ICICI Prudential AMC is tilted toward sectors benefiting from economic revival, including:
- Automobiles
- Cement
- Industrials and capital goods
- Financials (excluding unsecured consumer lenders)
Tawakley emphasised that India’s recovery will be led by domestic activity, not global cues.
Why cement Is back in favour
Calling cement a “necessary pillar of India’s urbanisation cycle,” Tawakley noted that: Profitability in cement has been historically low due to fragmentation. Consolidation and more rational capacity addition now support margin expansion. Strong housing and construction activity strengthen long-term demand.
“Cement has corrected, profitability can improve, and demand fundamentals are intact,” he said.
Smallcaps & midcaps: Too early to bottom-fish
Despite steep corrections, Tawakley remains cautious on the broader smallcap and midcap universe.
- Many new listings and weak business models have seen excessive valuations.
- Heavy promoter and PE selling over the past two years highlights structural risks.
He warned that several stocks may fall further as investors reassess underlying risks.
IPO space showing froth
Tawakley flagged the entire IPO market as overheated, citing inflated valuations and unsustainable price-to-book multiples. He said: “Many companies have made back their entire capital by selling just 25% in the IPO. That unwinding is healthy and necessary.”
Why consumer tech and fintech are not attractive
The fund house remains cautious on consumer tech and fintech due to:
- Weak profitability track records
- Rising household leverage in unsecured credit
- Higher macro and regulatory risk
“I prefer companies with a demonstrated history of profitability,” he noted.
Real estate cycle still intact
He remains constructive on real estate and home building—calling it essential for India’s economic cycle.
- Housing demand remains strong
- Developers’ balance sheets are cleaner
Sectoral tailwinds from income stimulus and urban expansion continue. “Homebuilding is a necessary and sufficient condition for the economy to do well,” Tawakley said.