A $22 billion fund manager expects this sector to bounce back by end of the year

Vineet Sambre, Head of Equities at DSP Mutual Fund, which manages over $22 billion, expects the consumption sector to recover by year-end.

He acknowledges the ongoing uncertainty, citing "shifting wallet shares and changing spending patterns." To navigate this, he suggests investors build a diversified portfolio of consumer discretionary stocks, anticipating that tax benefits and welfare schemes will help revive demand.

Sambre also highlights intensifying competition in segments like quick commerce, where profitability remains elusive.

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The broader market is witnessing rising competition across sectors, posing a major challenge for established companies. Alongside rapid technological disruption, this has created a demanding investment landscape that requires constant vigilance. "We have to be very alert in terms of how companies are maintaining their competitive moats," Sambre cautions.

A competitive moat refers to a sustainable advantage that helps a company protect its market share and profitability from rivals.

The impact of new entrants is already visible, particularly in the wires and cables sector, where stock prices reacted swiftly. "The stock reaction has already happened because the playbook was available—investors got worried very soon," Sambre notes.

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While valuation and growth remain considerations, with potential opportunities arising from market corrections, earnings and valuations in mid-caps are still largely driven by sentiment, with a risk of further downgrades.

DSP Mutual Fund's investment strategy during market declines involved adding to existing positions and selectively reducing exposure to companies with prolonged recovery periods. New investments focused on sectors experiencing cyclical lows, like specialty chemicals and auto ancillaries.

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