Expect to see a pickup in mass consumption in H2 of next financial year: Ashish Gupta

economictimes.indiatimes.com:

Ashish Gupta, CIO, Axis Mutual Fund, says “we have seen a big deleveraging of the corporate balance sheet and the expectation is that the next five-seven years will again be a deleveraging cycle for corporate India. We are still in the early part of the capex upcycle. So while multiples of some of these companies have gone up, the confidence stems from the fact that it is a multi-year cycle. Typically, these cycles last for seven-eight years. We are probably in the first couple of years of the upturn. Notwithstanding the elections, just the capex cycle has turned around and should benefit these companies.”

The question on everyone's mind is that we have had this terrific run-up already; what does the rest of the year hold in store and are these valuations that our markets are commanding justified?
Ashish Gupta: The market has been responding to what has been witnessed in the economy. The economic recovery has been very strong over the past two years. The GDP growth numbers have consistently surprised for the past four quarters and they have been upward revision both to GDP and corporate earnings. We need to see the move in the market in light of that. In the case of a broader market, the market multiples have not actually gone up, but the performance has been in line with earnings. It is our expectation for the year, that if we get the 18% earnings growth that is being forecasted, the market should continue to deliver good returns.

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