Flagging Indian sales of products like toothpaste and hair oil have been a drag on the share prices of the nation’s consumer goods makers, but each dip is a buying opportunity for a fund manager who sees the slowdown in demand as temporary.

“The stocks offer stability and steady growth,” said Mahesh Patil, Co-chief Investment Officer at Aditya Birla Sun Life Mutual Fund, which oversees assets of about $13 billion. “We don’t expect valuations to correct too much for consumer companies. They may consolidate a bit, but in a correction, we would look at them.”

Companies such as ITC Ltd , Hindustan Unilever Ltd and Marico Ltd , which sell everything from grains to beverages to detergents, have lost their shine on the stock market as a cash squeeze caused by the crisis in some finance firms hurt demand even for staples.

Also read:Consumption expenditure is losing steam

Data late on Friday showed India’s Gross Domestic Product rose at the slowest pace in several quarters only ratified the markets assessment of consumer businesses.

Patil said his bets on the sector are pinned on Prime Minister Narendra Modi’s government’s plan to buoy farmers spending by investing Rs 25 lakh crores ($359 billion) in rural development and giving annual household handouts of Rs 6,000. He expects a resumption in spending on higher-value items, like washing machines and refrigerators, that was put on hold during the six-week-long election that concluded two weeks ago.

“Staples and low ticket consumer discretionaries like consumer durable will do better,” he said. “We remain positive on the consumer story and think it will be India’s mainstay for growth for the next many years.”

While he would not name the stocks the firm has been buying, Aditya Birla Sun Life Frontline Equity and Aditya Birla Sun Life Equity Hybrid 95 added to holdings of cigarette to packaged food maker ITC, data as of April 30 compiled by Bloomberg show.

The funds held on to hair-oil seller Marico, white-goods maker Whirlpool of India Ltd and lighting producer Crompton Greaves Consumer Electricals Ltd.

“Expect acceleration in earnings this year, but there will be some downgrades after a few sectors witnessed a slowdown in last quarter,” he said.

“Estimates Nifty FY20 earnings growth at 22 per cent, driven mainly by financial, cement, oil and gas, and retail companies. Political stability, positive outlook on growth and the availability of capital will support the stock market and help retain valuations. While Nifty valuations look expensive, there’s room for the broader market to inch higher and do better in the medium term,” Mahesh Patil said.

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