Stories
Weaker Rupee Helps Domestic Manufacturers And Boosts Growth Says ICICI Pru Anand Shah
- •ICICI Prudential AMC expert Anand Shah views rupee depreciation as part of the economic solution rather than a problem.
- •The investment strategy strongly prioritizes manufacturing over consumption and value over growth.
- •The firm has successfully added to metal and textile sectors over the past few years while maintaining a selective approach to mid and small caps.
- •Exposure to IT has been slightly increased from zero due to corrected valuations, though the firm remains underweight.
- •Manufacturing companies are expected to deliver significantly stronger earnings compared to consumption-driven firms.
Key Questions Answered
Anand Shah views rupee depreciation as part of the solution rather than a problem because it offers domestic manufacturers temporary and meaningful breathing space. Since India consumes more than it produces and faces high logistics and power costs despite cheaper labor, a weaker currency helps offset these disadvantages and provides a boost to domestic manufacturing competitiveness.
The firm has shifted its stance modestly by adding to IT stocks over recent quarters, moving away from a zero-exposure position at the start of the year. Although they remain underweight on IT, valuations have corrected, expectations have moderated, and early negative impacts of AI are showing in the numbers. They are also monitoring how IT providers might benefit from implementation work as businesses integrate AI into their systems.
Shah's strategy focuses heavily on manufacturing over consumption and value over growth. His team favors mid- and small-cap strategies due to their greater breadth and higher concentration of manufacturing businesses, remaining overweight in these segments. Specifically, they have been adding to metals, textiles, and chemicals, noting that these sectors are delivering stronger earnings relative to consumption companies facing food and fuel inflation pressure.
