Despite the lacklustre trade we saw today, we still managed to end the week on a high note. Where do you see the market headed next week, and what cues should we watch out for? Apart from GST rationalisation reforms—where some clarity is still awaited—do you think the Jackson Hole Symposium in the US, which global markets are closely watching, will have any impact on India as well?
Mayuresh Joshi: Two things. First, from a global perspective, the Jackson Hole minutes will be key in determining expectations around US monetary policy—specifically how interest rates are likely to move and how upcoming macro data points may shape their decisions. Tariff impositions are also an important factor. Once the Jackson Hole summit concludes, attention will shift to next week, especially with the August 27th deadline looming for the additional 25% tariffs on India. Whether that deadline gets extended or negotiations take place before then will be watched very keenly by the street. So, these global macro events are going to be extremely important.
Second, within this global backdrop, on the micro side, corporate earnings have remained soft, which was largely on expected lines. However, with announcements already made and expectations of further notifications on GST rationalisation, you could see some positive momentum in consumption and corporate earnings during the second half. So yes, it’s going to be very interesting and quite fluid. The street will be watching these global developments, particularly what happens around August 27th, very closely.We were just talking about GST rationalisation reforms. Of course, we’re waiting for the implementation date and whether the impact will be visible in the festive season. Looking at how the week ended, the auto pack clearly stood out as the leader. What’s your view on the broader consumption space? And within consumption, are there any specific pockets where you see more value, especially with GST rate rationalisation in mind?
Mayuresh Joshi: It’s more of a bottom-up approach for consumption. Within FMCG, our sense is that volumes should show a steady uptick. Input costs have remained very benign over the past few months and are expected to stay that way. This allows operating leverage to play out through better volumes and pricing across SKUs. With moderate input costs, companies can achieve better EBITDA margins, stronger bottom-line growth, and improved return ratios. By that logic, FMCG as a sector should do well. Marico, for example, remains one of our top picks and is part of both our domestic and global portfolios.
On the apparel side, particularly for players focused on rural and semi-urban markets, history shows that once consumption picks up, these areas drive a significant part of the growth. Players like Vishal Mega Mart and VMart Retail could see meaningful gains in their apparel as well as FMCG businesses, with strong same-store sales growth over the coming quarters.
In consumer durables, urban consumption is expected to make a strong comeback, and you’ve already seen a sentiment-driven uptick in most white goods stocks. But in terms of volumes, I think the growth will be selective. Footwear, for instance, has underperformed recently, but we’re now seeing encouraging price action. With GST rationalisation, the affordability of footwear in rural and semi-urban areas will improve significantly. Stocks like Relaxo, and on the semi-urban/urban side, Campus Activewear with its integrated operations, can do well.
So, in our view, select FMCG leaders, a few alcobeverage names like Radico (which we continue to hold), and footwear companies are the spaces where consumption could pick up meaningfully over the next few months.
Apart from GST rationalisation, another development this week was the online gaming bill, which has now been passed by Parliament. What’s your view on this space? Do you see any opportunities to rotate into stocks here?
Mayuresh Joshi: No. Our thesis at Marketsmith has always been clear—wherever there’s significant regulatory risk, we prefer to stay away. The online gaming sector has carried regulatory overhang for quite some time. Now, with this bill, the risks have only increased. Many players are still in the unlisted space, and this move creates detrimental effects on revenue flows and the overall business model.
There’s also the risk of equity dilution, since these companies may need continuous monetary infusions to tweak platforms, make them skill-based, or comply with new regulations. Even then, there’s no guarantee of achieving break-even. So, we’ve consciously stayed away from this space. There are plenty of other strong opportunities in the market where we’d rather focus.