Insights from Kashyap Zaveri of MK Investment Managers
Kashyap Zaveri, a seasoned fund manager with over a decade of experience in sector research, is optimistic about the future of technology investment, particularly in the realms of digitization, automation, and artificial intelligence (AI). He predicts that by 2030, global technology spending will rise to 5% of total revenues, up from the current 3%. Notably, 50-60% of this increase is expected to be allocated toward digitalization and automation initiatives, reflecting a significant shift in business strategies aimed at enhancing efficiency and competitiveness.
Opportunities in Real Estate
In addition to tech investments, Zaveri highlights the potential for growth in the real estate sector, especially with anticipated interest rate cuts. He notes that lower interest rates create favorable conditions for industries closely linked to construction, including piping, ceramics, plywood, and other building materials. According to Zaveri’s analysis, sectors such as Non-Banking Financial Companies (NBFCs), real estate, and heavily leveraged businesses are likely to thrive in a low-interest-rate environment, as they benefit from reduced borrowing costs.
Rural Economic Recovery
Despite a challenging earnings season, Zaveri projects a strong rebound for the rural economy. The April-June quarter experienced stagnated growth, with Nifty 50 EBITDA and PAT rising only 5% and 4% respectively, impacted by the lengthy election period and adverse weather conditions. Nonetheless, with a surplus monsoon and robust Kharif sowing, a significant recovery in rural demand is on the horizon. This resurgence could drive overall economic growth, influencing various sectors positively.
Monetary Policy Insights
When asked about the Reserve Bank of India’s (RBI) potential interest rate cuts, Zaveri discusses the interconnectedness of emerging market economies’ monetary policies with those of the U.S. Federal Reserve. Previously, the RBI showed reluctance to adjust rates, but shifting economic indicators and the Fed’s recent rate cut of 50 basis points may provide the RBI with leeway to reconsider its stance. Zaveri emphasizes that the outlook for rate adjustments hinges on keeping inflation below 4% and ensuring growth does not dip below 6%.
Adding Real Estate to Investment Portfolios
While Zaveri does not currently incorporate direct investments in real estate stocks into his strategies, he acknowledges that if the interest rate cuts become a reality and economic conditions strengthen, increasing household expenditure will have positive implications for the real estate sector. Investments could extend to suppliers of piping, ceramics, plywood, and various building materials as the demand surges.
Adapting Investment Strategies
In light of potential interest rate changes, Zaveri explains his investment approach remains adaptive. Typically, he aims to create portfolios that maintain resilience regardless of rate fluctuations, focusing on companies with low debt levels or robust cash reserves. However, in a climate of reduced interest rates, sectors such as NBFCs, real estate, and firms with substantial debt are likely to benefit significantly from the enhanced access to cheaper capital, driving growth and profitability.
Disclaimer: The perspectives shared in this article represent the views of Kashyap Zaveri and do not necessarily reflect those of Moneycontrol or its management. Investors are encouraged to consult with certified financial experts before making any investment decisions.
