As the talks of the Indian market decoupling from its global peers are gaining momentum, Andrew Holland, CEO of Avendus Capital Public Markets Alternate Strategies believes India has always been a domestic-driven economy and it cannot decouple from the global trend completely.
Talking to ET Now, Holland said: "There is a narrative around India decoupling. There was a similar thought, back in 2007 going into 2008. We can talk about decoupling, but from a global economic and financial angle, India cannot be decoupled."
"Yes, one can say India is a domestic-driven economy and so it was in 2007 as well. That has not really changed. I am not into this decoupling kind of theory at the moment as a way of why our markets are better," he said.
Holland said he is wary of the valuations after the recent up move, however, he is positive about the FMCG and telecom sectors.
"There are two sectors I like- FMCG and telecom - because that is where I know I am going to get steady growth. I am not sure if I am going to get that from any other sector. The deflation trade involving banks and autos has already played out. It has been a great run and if I am to put the money elsewhere, it is FMCG and telecom now," he told ET Now.
He said that capex cycles are the big theme in India and the world but they will come from governments and companies. it is not going to be the usual roads and bridges, but will be particular industries where either there has been a supply shortage or there are worries about overexposure to one country like China, he said.
He said countries and companies will be spending their money on two things- one, defence and the other renewables.
"We are going to see investments into those particular industries and I would include semiconductors as that is something that India will need going forward and companies both in India and outside of India will look to building capacity here for the future consumption growth that we are going to see from India. That story is not going away from India for a very long time," he said.
Holland is not positive about the IT sector due to the looming recession in the US.
"In case of a global recession, especially in the US, I still think there is a downside to the tech stocks over the next six to nine months and I do not think Indian IT stocks can withstand that. The sentiment will be against the sector. But that does not mean that the valuations will become attractive in that time. It is just not a focus sector for us," he said.
"It is going to be banking, domestic consumption and consumer discretionary stocks, which are going to give very strong returns. IT will take its time as the global economy recovers but for the time being, I do not need to be in IT," said Holland.
Disclaimer: This article is based on an ET Now interview published by economictimes.com. The views and recommendations given in this article are those of the analyst. These do not represent the views of MintGenie.