ETMarkets Smart Talk: Sachin Relekar on consumption & defense: Top themes for future wealth creation for long term investors

Welcome to ETMarkets Smart Talk. In this insightful session, we sit down with
Sachin Relekar
, Senior Equity Fund Manager at
Axis Mutual Fund
, who shares his expert views on the key themes driving India's equity markets.
Sachin highlights consumption and defense as pivotal sectors offering promising opportunities for long-term wealth creation.
Amid global uncertainties and evolving domestic policies, he explains why these themes are well-positioned to benefit from India's structural growth story. Edited Excerpts –
Q) The month of May started on a volatile note with benchmark indices witnessing wild swings on either side. How are you reading into markets?
A) Since the beginning of 2025, several significant macroeconomic events have unfolded. The year commenced with a change in the US presidency, leading to a review of trade relationships with an "America First" objective.
In April, the US announced reciprocal tariffs across countries in varying degrees, followed by major changes, including a 90-day pause in tariffs with all countries including China.
There is also an expectation that in the coming days the US will sign trade deals with other countries. While these announcements are being made rapidly, the implementation is likely to be slow due to the importance and complexities involved.
In May, India experienced a geopolitical situation which while brief, its impact was substantial. Both global and domestic capital markets reacted to these macroeconomic events in May, and it is expected that these events will continue to influence market movements in the near term.
However, we believe that the extreme negativity from these events has already been priced in. Moving forward, greater clarity on trade relations is anticipated, which will provide direction to the market.
Over the medium to long term, our outlook remains largely positive, given the stronger domestic economic prospects.
Q) What is the sense you are making from the March quarter results? Are downgrades more than upgrades this time around?
A) The earnings season has produced a mixed set of results. Companies with exposure to developed markets have reported lower earnings, which was anticipated.
Companies within the consumer staples segment continue to experience lower volume growth, while consumer discretionary companies have reported weaker numbers. However, internet, telecom, and select capital goods companies have delivered positive results.
Q) What is the long-term outlook for Indian equities over the next few years?
A) We believe that India represents a long-term growth story. Our positive outlook is particularly focused on the
consumption sector
, with a strong emphasis on the consumer discretionary segment.
Urbanization is a significant long-term trend that is expected to drive sustained growth in this area.
Government policies are clearly designed to support domestic manufacturing, which is a critical component of India's economic strategy.
The
defense sector
, as a thematic investment, may also hold a positive long-term outlook due to ongoing government initiatives and increased budget allocations.
Overall, there are several promising themes to consider. Listed companies in India appear to have healthier balance sheets, which enhances their ability to capitalize on growth opportunities. These factors collectively contribute to a favorable long-term equity outlook for India.
Q) Which sectors are expected to deliver strong returns going forward? Any safe bets which investors can consider?
A) There are several interesting themes and sectors which we believe may benefit from the healthy domestic economic growth and government policies. Some of them can be consumption, consumer discretionary, etc.
Q) How can high-net-worth individuals effectively build wealth in the current market environment?
A) The
investment outlook
over the long term is largely positive. While investing one however needs to be disciplined about the management quality, business competitiveness and valuation.
At the same time one should take a longer-term view of the opportunity to meaningfully benefit. Last but not the least, it is important to be disciplined about asset allocation. It plays most important role in determining the financial outcomes.
Q) What is your take on Gold? Recently, it crossed Rs 1 lakh in the physical market. Right time to increase allocation or investors should wait for some cool off?
A) Gold is currently responding to the uncertainty surrounding global macroeconomic conditions. Should these conditions stabilize and improve, the support for gold may diminish.
Therefore, it is essential to focus on prudent asset allocation. Given the natural fluctuations of markets, strategic asset allocation is crucial for wealth building.
A diversified portfolio is generally effective, provided one has the patience to maintain it over the long term.

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