Monday, October 2

The share market’s highlights for August, 2023, reveal that Sensex and Nifty have managed to stay above their moving averages and close in green.

The time now is 14:25 on August 09, 2023.

Emkay Investment Managers, a holding company of Emy Global Financial Services, believes that the manufacturing sector in India is poised to experience significant growth. This is largely due to favorable government policies, the benefits of China+1, and the growing competition within the industry, as per EIML. BSE Manufacturing has outpaced other industries in terms of growth rate, with expectations high for future trends.

In recent years, the Indian manufacturing industry has experienced remarkable growth. During FY15-19, shares in the listed sector were among the least profitable for investors, earning in low single-digit returns. By March 2021, returns from this sector had been in higher double digits.

This setup is a positive sign for the sector, which is expected to achieve double-digit returns and surpass its broader benchmark peers in the coming years. China+1 will continue to benefit the industry’s growth for years to come.

The government capex at present is 2x more than historical averages and both central and state capexes are significantly higher than the historical mean. According to data available, the central + state caps represent approximately 5.6% of GDP, which was 2.8% of pre-COVID 20-year average. The building of roads and railways infrastructure across the country is the primary driver of this growth, resulting in a 23% CAGR during the previous upcycle of 2003–08.

The sector is exposed to risks related to interest rates, liquidity, and a potential slowdown in the economy. Although interest rate and liquidity risk are significant risks, there are no significant dangers currently as the central bank is on lockout mode and is expected to initiate relaxation from CY24.

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