Market not too expensive, time for making fresh investments: Joseph Thomas 

​Stating that the valuations are neither cheap nor too expensive,Joseph Thomas, Head of Research at Emkay Wealth Management, says this is the time to initiate fresh investments with a medium to long-term perspective.”The normalization of returns has already taken place on both midcaps and smallcaps, and this calls for selective investments in both,” he adds.Edited excerpts from a chat:How strong do you think the impact of the Rs 1 lakh crore boost to consumption from income tax relief would be?The net disposable income of Rs 1 lakh crore with taxpayers will go into either consumption, investment, or both. In either case, the net money available will have a multiplier effect. It may be a small amount in the broader context, but it will definitely have a positive impact, especially at a time of sluggish demand. The extra money fuels the propensity to consume and invest. This has another dimension: spending often occurs ahead of the realization of income, which is a behavioral pattern peculiar to economies like India. Therefore, it is a good measure that helps catch two birds with one shot.Do you think discretionary goods would benefit more than staples?The demand for staples is inelastic to price factors. Staples, by their very nature, have more consistency in earnings, and the stocks have relatively lower volatility, with better dividend yields. However, we need to consider the fast-changing trends in consumer spending, particularly regarding product preferences focused on health and well-being. High inflation and lower per capita incomes have also adversely affected the markets. While staples provide stability, the growth aspect—which is central to price performance—might be easier to come by from consumer discretionary goods. With a fall in the consumer price index, rate actions by the RBI making credit cheaper, etc., the environment will be more favorable for consumer discretionary goods.When you leave more money in the hands of young Indians, it will have a multiplier effect. The list of winners will go beyond FMCG and consumer durables to sectors like auto, QSR, travel, tourism, and even capital markets. Which other sectors do you think stand to gain?From a medium-term perspective, basic sectors like Pharma and Healthcare, Technology, Chemicals, and Auto Ancillaries are expected to perform well, along with select stocks in banking and financial services. The tariff escalation by the US with China may benefit many companies in India, especially with the China-plus-One trend already operational post-pandemic. As growth picks up globally and inflation declines, the demand environment will improve over time.How do you think this will impact banks and NBFCs in terms of household debt, consumer financing, and easing pressure on deposits?Part of the net disposable income accruing to taxpayers will find its way into banks, potentially paying off stressed credit card or loan assets. In the latest RBI policy, the repo rate has been cut by 25 basis p