New Delhi, Oct 10 Consumption theme, NBFCs and pharmaceuticals sectors are expected to surge due to GST reforms, and the festive season will boost demand in autos, consumer durables, FMCG, and broader discretionary segments, a report said on Friday.
Axis Mutual Fund in a report said that it maintains an overweight position on the consumption, NBFCs and pharmaceuticals.
The fund house predicted a high probability of a 25 bps rate cut in December, with an additional 25 basis-point cut possible in February if the tariff impasse continues.
Axis MF said that the GST rate cut is expected to boost replacement demand and accelerate premiumisation in the automotive sector. Axis MF informed that it raised its exposure in automobiles and remains positive on retail, hospitality, renewable, capex, power transmission, defense, travel and tourism sectors.
"We also remain constructive on other consumer discretionary plays—especially in retail, hospitality, and travel & tourism—which are poised to gain from strengthening domestic momentum and festive season demand," the fund house said.
Valuations have declined from recent peaks, and India's premium over emerging markets has dropped to levels not seen in four to five years. However, the market continues to rank as one of the most expensive globally, only trailing the US, according to the fund house.
The fund house said that with 100 basis points of cuts already implemented, the majority of easing is complete and recommends accrual strategies over duration plays in the fixed income market.
“As expected by us, the Fed lowered its interest rates against a backdrop of increasing unemployment. We expect another rate cut in the pipeline,” the report said.
"From a medium-term perspective, we favour accrual strategies over duration plays. We expect the 10-year G-Sec to trade in a range of 6.30-6.65 per cent for the remaining part of the financial year," the fund house said.
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