Healthcare and Manufacturing Sectors Poised to Gain from Fed Rate Cuts, Says Motilal Oswal Report
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Healthcare, manufacturing sector to benefit most from Fed rate cuts, reveals Motilal Oswal report
The report highlighted that the healthcare sector will be the fastest-growing vertical over the next 12 to 18 months. (Image Credits: Pixabay) A new report by Motilal Oswal has revealed that the healthcare and manufacturing sectors are expected to benefit the most from the Fed's decision to lower interest rates, signaling strong growth prospects in the coming months. U.S. Federal Reserve's nticipated rate cut which will be happening on September 18, investors remain cautiously optimistic about its potential effects on various sectors. The report highlighted that the healthcare sector will be the fastest-growing vertical over the next 12 to 18 months. Despite being largely agnostic to rate cuts, healthcare is expected to thrive due to its minimal threat of insourcing. The report suggested that the resilience of healthcare, coupled with the demand for innovations in biotechnology, clinical research, and digital health solutions, positions it as a key beneficiary of the upcoming rate cuts. "Healthcare will be the fastest growing vertical over the next 12-18 months. The sector is largely agnostic to rate cut tailwinds" said the report. Another sector, manufacturing, also stands out with high growth potential, particularly due to the technological advancements it could embrace during the rate cut cycle. The report noted that lower interest rates are expected to spur investments in technology, further accelerating the industry's recovery. Although the sector faces some challenges, such as limited IT services penetration in Europe, the report identifies opportunities in technologies like generative AI (GenAI), digital twins, IoT, and connected factories. "Manufacturing also shows a strong case for recovery; a rate cut cycle to spur investments in technology, and the threat of insourcing here remains fairly low" the report added. However, the report also pointed to challenges in the banking, financial services, and insurance (BFS) sector, which faces significant threats from insourcing despite the positive effects of rate cuts. While there is some pre-GenAI spending in BFS, the adoption of GenAI solutions may be slower in this sector due to the complexity of enterprise-wide transformation. The report said "BFS enjoys positive effects from rate cuts but faces significant challenges due to a severe insourcing threat, limiting its recovery potential". Retail, on the other hand, is predicted to benefit from rate cuts as increased consumption in client markets, particularly in the U.S., is expected to fuel growth. The report highlighted that the sector could shift its focus from cost-reduction strategies to revenue-generating initiatives. Moreover, the hi-tech sector ranks fifth in terms of benefiting from rate cuts, according to the report. While rate cuts may have a moderately positive impact on the sector, the threat of insourcing remains high. Many software companies are expected to retain tight control over their intellectual property, limiting vendor opportunities. Overall, the report identifies healthcare and manufacturing as the top sectors poised to benefit from the U.S. Fed's anticipated rate cut, while also highlighting opportunities and challenges in BFS, retail, and hi-tech industries.
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Healthcare, manufacturing sector to benefit most from Fed rate cuts: Motilal Oswal
As the U.S. Federal Reserve's anticipated rate cut approaches, a report by Motilal Oswal suggests that the healthcare and manufacturing sectors are expected to benefit the most. Healthcare is projected to be the fastest-growing sector, while manufacturing may see technological advancements. Challenges remain for BFS, retail, and hi-tech industries.As the date for the U.S. Federal Reserve's anticipated rate cut draws near (September 18), investors remain cautiously optimistic about its potential effects on various sectors. According to a report by Motilal Oswal, the healthcare and manufacturing sectors are expected to benefit the most from the Fed's decision to lower interest rates, signaling strong growth prospects in the coming months. The report highlighted that the healthcare sector will be the fastest-growing vertical over the next 12 to 18 months. Despite being largely agnostic to rate cuts, healthcare is expected to thrive due to its minimal threat of insourcing. The report suggested that the resilience of healthcare, coupled with the demand for innovations in biotechnology, clinical research, and digital health solutions, positions it as a key beneficiary of the upcoming rate cuts. "Healthcare will be the fastest growing vertical over the next 12-18 months. The sector is largely agnostic to rate cut tailwinds" said the report. Another sector, manufacturing, also stands out with high growth potential, particularly due to the technological advancements it could embrace during the rate cut cycle. The report noted that lower interest rates are expected to spur investments in technology, further accelerating the industry's recovery. Although the sector faces some challenges, such as limited IT services penetration in Europe, the report identifies opportunities in technologies like generative AI (GenAI), digital twins, IoT, and connected factories. "Manufacturing also shows a strong case for recovery; a rate cut cycle to spur investments in technology, and the threat of insourcing here remains fairly low" the report added. However, the report also pointed to challenges in the banking, financial services, and insurance (BFS) sector, which faces significant threats from insourcing despite the positive effects of rate cuts. While there is some pre-GenAI spending in BFS, the adoption of GenAI solutions may be slower in this sector due to the complexity of enterprise-wide transformation. The report said "BFS enjoys positive effects from rate cuts but faces significant challenges due to a severe insourcing threat, limiting its recovery potential". Retail, on the other hand, is predicted to benefit from rate cuts as increased consumption in client markets, particularly in the U.S., is expected to fuel growth. The report highlighted that the sector could shift its focus from cost-reduction strategies to revenue-generating initiatives. Lastly, the hi-tech sector ranks fifth in terms of benefiting from rate cuts, according to the report. While rate cuts may have a moderately positive impact on the sector, the threat of insourcing remains high. Many software companies are expected to retain tight control over their intellectual property, limiting vendor opportunities. Overall, the report identifies healthcare and manufacturing as the top sectors poised to benefit from the U.S. Fed's anticipated rate cut, while also highlighting opportunities and challenges in BFS, retail, and hi-tech industries. (ANI)
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Healthcare, manufacturing sector to benefit most from Fed rate cuts: Motilal Oswal
The report highlighted that the healthcare sector will be the fastest-growing vertical over the next 12 to 18 months. Despite being largely agnostic to rate cuts, healthcare is expected to thrive due to its minimal threat of insourcing. The report suggested that the resilience of healthcare, coupled with the demand for innovations in biotechnology, clinical research, and digital health solutions, positions it as a key beneficiary of the upcoming rate cuts. "Healthcare will be the fastest growing vertical over the next 12-18 months. The sector is largely agnostic to rate cut tailwinds" said the report. Another sector, manufacturing, also stands out with high growth potential, particularly due to the technological advancements it could embrace during the rate cut cycle. The report noted that lower interest rates are expected to spur investments in technology, further accelerating the industry's recovery. Although the sector faces some challenges, such as limited IT services penetration in Europe, the report identifies opportunities in technologies like generative AI (GenAI), digital twins, IoT, and connected factories. "Manufacturing also shows a strong case for recovery; a rate cut cycle to spur investments in technology, and the threat of insourcing here remains fairly low" the report added. However, the report also pointed to challenges in the banking, financial services, and insurance (BFS) sector, which faces significant threats from insourcing despite the positive effects of rate cuts. While there is some pre-GenAI spending in BFS, the adoption of GenAI solutions may be slower in this sector due to the complexity of enterprise-wide transformation. The report said "BFS enjoys positive effects from rate cuts but faces significant challenges due to a severe insourcing threat, limiting its recovery potential". Retail, on the other hand, is predicted to benefit from rate cuts as increased consumption in client markets, particularly in the U.S., is expected to fuel growth. The report highlighted that the sector could shift its focus from cost-reduction strategies to revenue-generating initiatives. Lastly, the hi-tech sector ranks fifth in terms of benefiting from rate cuts, according to the report. While rate cuts may have a moderately positive impact on the sector, the threat of insourcing remains high. Many software companies are expected to retain tight control over their intellectual property, limiting vendor opportunities. Overall, the report identifies healthcare and manufacturing as the top sectors poised to benefit from the U.S. Fed's anticipated rate cut, while also highlighting opportunities and challenges in BFS, retail, and hi-tech industries. (ANI)
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A recent report by Motilal Oswal Financial Services suggests that the healthcare and manufacturing sectors are likely to benefit the most from anticipated Federal Reserve rate cuts. The analysis highlights potential impacts on various sectors and the broader Indian economy.
Federal Reserve Rate Cuts: A Boon for Healthcare and Manufacturing
A recent report by Motilal Oswal Financial Services has shed light on the potential beneficiaries of the anticipated Federal Reserve rate cuts. According to the analysis, the healthcare and manufacturing sectors are expected to reap the most significant advantages from this monetary policy shift
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.Sector-Specific Impacts
The report highlights that the healthcare sector, particularly pharmaceuticals, is likely to experience substantial benefits. This is attributed to the sector's high foreign currency borrowings and its export-oriented nature. Similarly, the manufacturing sector, especially capital goods and engineering companies, is expected to gain from lower interest rates and potential increases in order inflows
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.Broader Economic Implications
The anticipated rate cuts are expected to have far-reaching effects on the Indian economy. The report suggests that these cuts could lead to increased foreign inflows, potentially strengthening the Indian rupee against the US dollar. This currency appreciation could benefit import-dependent sectors such as oil marketing companies and aviation
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.Impact on Financial Sectors
While healthcare and manufacturing are projected to be the primary beneficiaries, the financial sector is also expected to see positive effects. Banks with a higher share of foreign currency borrowings are likely to benefit from lower hedging costs. Additionally, the report indicates that non-banking financial companies (NBFCs) could see improved growth prospects due to potentially lower borrowing costs
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.Challenges for Export-Oriented Sectors
However, the report also points out potential challenges for certain sectors. Export-oriented industries such as IT services may face headwinds due to the anticipated appreciation of the Indian rupee. This could potentially impact their profit margins and competitiveness in global markets
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Global Economic Context
The Motilal Oswal report places these projections within the broader context of global economic trends. It notes that the anticipated Fed rate cuts come amidst expectations of cooling inflation and a potential economic slowdown in the United States. These factors are likely to influence global capital flows and currency markets, with ripple effects across various sectors of the Indian economy
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.Investor Implications
For investors, the report suggests potential opportunities in healthcare and manufacturing stocks. It advises keeping a close watch on companies with significant foreign currency exposure and those poised to benefit from lower interest rates. However, it also cautions about potential volatility in currency markets and the need for a balanced investment approach
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