Expect rate moderation, not a severe rate cut cycle, denoting problems with growth & capex: Vinod Karki
Vinod Karki, Equity Strategist,ICICI Securities, says some growth concerns are seen on the defensive side. Cyclicals are growing faster, and there are growth concerns in the IT sector and a lot of concerns on the agri-rural economy. This year, we had a massive heatwave and now a lot of rainfall. The temporal and spatial distribution has been pretty uneven, and so the outlook is not looking that good. IT services and consumption have seen growth issues overall. The valuation is at a record high. So, even though the cyclicals are expensive, there might be some shifts there.
On Thursday, the Supreme Court rejected telecom firms' pleas to recalculate adjusted gross revenues (AGRs) amid ongoing disputes over government dues. Vodafone India, Bharti Airtel, and others argued that the Department of Telecommunications erred in calculating license fees and spectrum charges. This particular news development coming in, is not too positive for Vodafone Idea or the telecom space as a whole. Do you have a view on the telecom space?
Vinod Karki: Overall the telecom sector is coming out of a lot of pain. Initially, there was a lot of competitive intensity followed by regulatory issues, then the court orders and things like that. Finally, the sector as such is seeing tariffs going up after a long time. That is good overall.
Cash flows are going to improve and profits are going to rise and they will be able to invest, which is not happening because tariffs are not rising. So, overall, the sector is good. Individual stocks will have
