Surfing The Consumption Wave
Investors India|October 2019
In this shapeshifting world of finance, change is the only constant.
Anand Shah
Surfing The Consumption Wave

The good thing is that change also affords us investment opportunities that can be both enduring, as well as, profitable. With eyes set on assailing the USD 5 trillion economy mark by 2023, India is likely to become an investment destination of choice for investors across the globe. This growth is going to be fuelled by the 0.4 billion people that live in urban India and the 0.9 billion people that live in rural India.2 Next year, we are touted to become the youngest country in the world with an average age of ~28 years. As more and more people join the workforce, it is likely to have a positive impact on productivity, incomes and discretionary spending. This trifecta of increased productivity, increased incomes and increased discretionary spending is expected to conflate into giving a big boost to consumption in the country. Herein lies the opportunity.

Growth is not a One-Way Street

The consumption theme works if individuals spend. However, spending habits are influenced by a host of factors and can often be fairly cyclical. The current economic environment tells us that the tide is not flowing in only one direction. Various cyclical consumption-related indicators, especially sales numbers in the automotive sector, have showed a contraction in the recent past. Additionally, muted trade activity, restricted government spending and lacklustre credit growth are all pointing towards sluggishness in the economy. The key to thriving in this environment is to identify sub-themes that are relatively insulated from cyclicality and then judiciously invest in stocks that adhere to these sub-themes.

Finding the Best amongst the Best

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