To start with, it is the PM’s GST bonanza that has given a positive cheer to the market. The GST cuts are expected to spark around $13 billion in consumption, providing a strong tailwind to the FMCG sector. The move ahead of the festive season is crucial and is likely to translate into stronger volumes, better consumption, and overall positive sentiment. What is your take on the FMCG sector, considering its sideways action over the last two to three years?
Sushant Bhansali: Post-COVID, rural recovery was slower compared to urban markets, which were already performing well. Over the last two to three years, FMCG growth was primarily urban-driven, but rural penetration is now improving. Combined with the expected GST cuts around Diwali, this should accelerate recovery. The underperformance of the past two to three years could translate into stronger returns over the next 6–18 months.
What specific themes within consumption do you expect to perform well, including areas previously underperforming?
Sushant Bhansali: It’s a two-pronged approach. First, rural-focused players with strong distribution networks are likely to do well in H2 of this year. Second, consumer discretionary segments, currently taxed at 28% GST, could benefit if rates drop to 18% as widely speculated. These areas should provide additional growth levers.
Considering the GST announcement is not yet official, should investors enter the market now or wait?
Sushant Bhansali: It is a good entry point. Investors may stagger investments slightly, but waiting will not yield results. Large-caps and mid-caps are at reasonable levels for a 1–2 year horizon, and for those with a 3+ year horizon, any time is suitable. Recent global uncertainties have provided attractive entry points. With lower interest rates, tax cuts, and GST implementation ahead of Diwali and the wedding season, markets could see an upbeat turnaround and reach new highs.
You are positive on consumer discretionary, staples, auto, apparel, agrochemicals, and consumer durables. But what about defence and shipbuilding, considering the government’s focus, including the mission Sudarshan Chakra to develop indigenous aerial defence systems by 2035?
Sushant Bhansali: Defence remains a strong long-term bet, but short-term flows may be constrained. Government finances are under pressure, with slower direct tax growth and GST rate adjustments affecting indirect taxes. Consequently, short-term capex and investments in this sector may be limited. The long-term story, however, remains intact, and sideways movement could continue until better entry points emerge.
