#DavosBrainstorm2024: Deep Dive Into A Volatile Global Landscape With Jefferies India

Watch the BTTV Exclusive from DAVOS with Mahesh Nandurkar, MD & Head of Research, India, Jefferies and Aashish Agarwal, Country Head, India, Jefferies with Siddharth Zarabi, Managing Editor, Business Today TV on India as a destination for foreign investors , their India positioning, the rise and sustainability of housing cycle and capex cycle. The discussion also focusses on their recent report of India Strategy 2024 — a continued strength resurgence of a multi-year capex upcycle, which implies robust 6-7% GDP growth over the next 5-7 years. Potential slowdown in Govt capex in the upcoming budget is not a worry. Foreign investor positioning on India is light & CY24 should see greater inflows which should help banking stocks. We like domestic cyclicals viz. banks, power, telecom, industrial, property. UWT IT, Consumer, Energy. We increase UWT on consumer & raise banks OW. India’s multi-year capex cycle has started unfolding. India's capex (GFCF) to GDP ratio bottomed out in FY20 and has since risen by 270bps but is still 500-600bps lower than the previous peak seen around 2010. All the three elements of the capex cycle (Housing, Corporate Capex & Govt Capex) are now firing and hence the potential global slowdown should have limited impact on India. A combination of a strong pent-up demand for housing, above average affordability and 12-year low unsold inventory should drive a multi-year virtuous housing cycle. Ditto for corporate capex with all-time low D/E ratio for Indian corporate, along with a decade high capacity utilisation level and well capitalised banking system should drive corporate capex.