Economic fundamentals falling into place: Ritu Gangrade Arora

In a converstaion with ET Now, Ritu Gangrade Arora, CIO, Canara HSBC OBC Life Insurance talks about the improving economic conditions, consumer demand and global scenario. Edited excerpts.

ET Now: What are you making of Unilever’s Q3 commentary? They say consumer demand remains weak and volumes have only slowed further and this is a little surprising considering one is already talking about as to how there is rural, urban demand uptick.

Ritu Gangrade Arora: I believe that consumer discretionary spending is coming back. Every trigger is there for it to come back like – good monsoon, OROP, pay commission. Rural economy as well as urban economy should start looking up. We are betting heavy on domestic consumables and consumer cycle returning. I hope we will see a different result from the other companies going forward. So economic, macroeconomics are very much in place and now I would very eagerly look at the results showing an uptick.

ET Now: What about the consumer staples? No FMCG company is endorsing that oh! big demand is back.

Ritu Gangrade Arora: We are personally looking at the fact that the economy is looking better than it ever did, be it in whatever parameters you pick up - inflation, currency position, current account deficit. So all macroeconomic fundamentals are in place. There is good amount of purchasing power with individuals and hence for us domestic sectors be it auto, private sector banks, NBFCs, those will see more upgrades than downgrades. We see the end of the earning downgrade cycle but clearly we are looking at the domestic cyclicals being trigger there.

ET Now: What about the market per se because we are very close to testing those surgical strike days’ lows already? We have some weak Chinese data coming in and that seems to be rubbing off on European markets? We too are facing the heat. What is happening out there?

Ritu Gangrade Arora: A time correction and consolidation in the market should not disappoint us. It is to be expected after the rally that we have seen over the last few months. What started in March with a 10% return has sustained for the last few months and so a pause is welcome. It is healthy. Having said that it is very important to know that FII flows have come down to a trickle which will reflect in the market movement. Global worry will continue to dominate the mind space. From China, Europe to US, we are looking at interest rates and how the near zero negative interest rate cycle will be corrected. Also, how growth will return and with no clear solution insight. There will be lot of headwinds coming from global economy. While Indian economy remains very robust, almost like an island of calm in turbulent seas, our portfolio has been very domestic focussed for the last few months. This kind of turbulence does not surprise me but, of course, it is something that we need to be cautious of and I would suspect it could continue for the next few months at least.