Good time to stay invested; credit growth, consumption revival to drive next rally: George Thomas

ETMarkets.com With the earnings season around the corner, George Thomas, Fund Manager at Quantum AMC, believes Indian equities are entering a phase of renewed optimism — supported by improving credit growth, potential consumption revival, and reasonable valuations after a year of market correction.In an interview with ET Now, Thomas said: “Given that markets have corrected over the last one year and earnings have trended up, the upside potential for investors has improved. From a long-term perspective, it’s a good time to stay invested and even make fresh allocations to equities.”Banking and FMCG show early signs of revivalThomas noted that operational updates from the banking sector were encouraging, with clear evidence of credit growth picking up in recent months.“Banks have reported sequential uptick in credit growth, which was expected. In the FMCG space, the numbers are stable, though a strong revival is yet to show up,” he said.He added that with tax cuts boosting disposable income, consumption could see a meaningful pickup in the near term.Live EventsYou Might Also Like:Q2 earnings beginning this week to be modest but 3 themes can make money: Motilal Oswal“Given the low base of earnings from previous quarters, the upcoming results season should look reasonably positive,” he noted.It’s a great time to add exposure to financials and ITQuantum AMC remains constructive on the financial sector. Thomas revealed that the firm continues to hold high exposure to private sector banks, along with insurance and asset management companies, which benefit from rising savings and formalization of the economy.He also maintained confidence in IT services, noting that valuations have turned more attractive amid recent consolidation.“Our allocations remain large in financials and IT services. We are quite optimistic about these sectors from a two-year forward perspective,” Thomas said.You Might Also Like:Gold shines as dollar weakens amid US shutdown; commodities key hedge: Jonathan SchiesslNew bets: Pharma and logisticsDespite avoiding sector-based positioning, Thomas shared details of two recent stock additions in the Quantum AMC portfolio — a generic pharma company and a logistics firm poised to benefit from India’s infrastructure upgrade.“We’ve added a pharma company that’s facing a drug exclusivity cliff. The market is worried, but we believe its other pipeline drugs will offset that impact,” he explained.On logistics, he added: “We also invested in a logistics company that stands to gain from the commissioning of the Dedicated Freight Corridor (DFC) and growth in containerized rail traffic.”Valuations are reasonable: Stay invested, but be selectiveWhile Indian equities have corrected in the past year, Thomas cautioned investors against sitting on the sidelines.You Might Also Like:Private banks, consumption and metals drive optimism amid earnings season“Markets have built a strong earnings base, and valuations now offer a better risk-reward balance,” he said.However, he advised investors to avoid frothy smallcaps and stick to valuation-conscious funds:“Investors should choose funds that pay attention to valuations — especially in small and midcaps. These funds can reasonably outperform over the next few years.”Global watch: US trade talks remain a key triggerThomas highlighted that global trade negotiations with the US remain a critical factor for short-term market movement.“If trade negotiations conclude positively, we can expect some near-term upside in the Indian market,” he said, but reiterated that long-term fundamentals remain intact.Don’t sit out the marketGeorge Thomas’ message to investors is clear — this is a good time to stay invested.With credit growth improving, consumption rising, and valuations more attractive, the stage is set for India’s next leg of market expansion.“It’s not the time to be on the sidelines. Earnings growth should turn upward from here, and investors who stay patient can see meaningful gains over the next two years,” he concluded.Add as a Reliable and Trusted News Source Add Now! 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