Why Rupee Weakness Is Actually An Opportunity For India: Pankaj Tibrewal Explains

Added: 2026-05-23

[00:00:00]Pankaj, hi. Good morning. Tamanna here.

[00:00:02]When we last spoke, you talked about how you were 99.5% invested in the markets at the start of this crisis. And at that moment in time, it seemed like, you know, the the wisest call. Since uh if you look at what's happened since and where we're at with rupee becoming a real pain point for the Indian um equity markets as well as from a foreign perspective or a foreign investor's perspective, would you re-look at that policy? Is this the time to be more careful or to stay fully invested?

[00:00:37]So, Tamanna, if you look at the rupee, I have a very different take. Uh rupee is not only because of crude and balance of payment or current account problem.

[00:00:46]Because your current account is moving from 30 to 35 billion dollars to say 90 billion dollars. So, 60 billion dollars incremental won't create such a pressure on rupee which we have seen uh over the last 4-5 months. Uh I think the bigger problem has been that importers which were complacent of not hedging themselves um have suddenly rushed and panicked and you saw a significant uh covering on by the importers' side.

[00:01:12]On the other side, because the rupee was depreciating, exporters have been relaxed and they are not supplying dollars uh incrementally and they are not hedging themselves. So, you have seen a very uh sharp disconnect on that side uh which has led to rupee depreciation. Our view is that rupee is undervalued significantly right now. Uh and I see the opportunities which has come along the way.

[00:01:36]Um our sense is that when you look at the yuan versus rupee, yuan has appreciated around 22% against rupee.

[00:01:44]And mind you, from 2013 to 2025, yuan-rupee trade was in a very narrow range. And in the last 5 months, 6 months, yuan has appreciated 22%. What it means is that when we are meeting companies which are two in two parts, one is the export segment. Uh the companies are saying that we are getting inquiries from country we never thought about. Because they are the source supplier for Chinese and we are far more competitive when you look at from a currency uh perspective now. So, exports in my view with a lag can start picking up significantly and in areas where Chinese were dominant and Indians uh didn't have that share, that's an opportunity I see. The second area where I see is that in many sectors, Chinese competition was very harsh for the last three, four years.

[00:02:32]And uh three things have happened. One is the currency which I talked about.

[00:02:36]Logistic costs have doubled and the third the export rebate by Chinese government has been withdrawn. All three things combined, if you look at slightly from a medium-term perspective, many of the domestic sectors have a far better footing in terms of growth because Chinese competition at the sidelines will be abated. Let me give you a small example. Uh we were doing some channel checks on the PVC pipe manufacturing. In the month of April, we saw the PVC import from China, which is through carbide road and others, our estimation about 290,000 tons and which created a pressure on PVC pricing. And these shipments were booked in the month of March.

[00:03:15]But now in the month of May, that number has come down to 1 lakh, 1 lakh 5,000 tons only because Chinese rebates have been uh withdrawn and yuan has appreciated significantly and the imported traders are running a huge forex loss. So, I think these dynamics will play across differently in many sectors and I think people who can go deep dive work uh hard and pick out those sectors and stocks, I think will be the winners over the next 6 12 months. On a broader basis, index may remain range-bound, but I think it's a bottom-up stock pickers market, I again repeat.

[00:03:51]So, where is that, you know the opportunities you've described Pankaj?

[00:03:57]You know, just just as an argument, depends now on Indian exporters taking up this chance that they have got. What is the front and center visible opportunities from an for an equity investors perspective?

[00:04:12]Because the same opportunity you're describing also came post COVID. It's come at various times, right? For Indian exporters. So, that's that's I would say a larger play, hopefully it will happen.

[00:04:21]Right now, what is the opportunity and is there any opportunity right now?

[00:04:26]Yeah, I mean that's what I've been saying Tamanna that look at sectors where the Chinese imports was significant for the last 2-3 years. On the margin they have started to come down. Which means that the pricing power with the domestic guys increases.

[00:04:41]And then that's a very very heartening thing to see.

[00:04:44]We saw some of the auto and precision engineering companies reporting very strong numbers. And their commentary for the next foreseeable future also looks to be very strong. And they are seeing opportunities which they have never seen in terms of supply chain in the last 5 years. So, the point which I'm trying to say is that uh in this market you can be negative.

[00:05:07]There are various macro headwinds, West Asia crisis, so much of uncertainty. But in this crisis, the idea should be to look out for opportunities where market share gains are happening. And let me tell you in an inflationary situation we have seen in the past cycles also, the market share tends to move from unorganized smaller players to the leaders of the sector.

[00:05:30]And you go into con calls right now across sectors which are leaders, you will see that commentary coming out.

[00:05:38]In the wood panel space a couple of weeks back, one of the wood panel company said that we have seen market share shift from unorganized to organized. You saw that in ceramic tiles that Morbi which was largely unorganized had started to see problems and market share shifted to the top two three guys.

[00:05:56]Uh it may be very near term, but I think that's the trend if inflation is going to stay. Because smaller guys won't have balance sheet, they won't have cash flows, they don't have working capital credit limit. So how they will secure the raw materials and if they don't secure the raw materials, how they will sell? So intuitively the leaders of every sector becomes extremely strong in an inflationary environment. They will have their challenges, but the challenges when you look on a relative basis is better. And I think many of the companies will surprise us on the market share gains in this year compared to the past which we have seen.

[00:06:34]So I'm I'm quite okay with owning the leaders of across sectors. I think they will surprise us on the market share gains. Challenges remain on on on raw material supply chain, everything. Uh and demand destruction will also happen. But I believe that you can see the half glass full, half glass empty. I believe there are opportunities on a bottom up basis where companies after many many quarters are moving into the double digit demand growth environment which has we have not seen for a long time. And tomorrow the war ends, suppose, and you see every day day conflict in situation, do you get that opportunity again? Answer is no.

[00:07:11]Okay. So I I remain uh constructive. I know uh it's against the tide today, but I believe that bottom up approach is the way to go in this year.