MUMBAI: The Indian stock market’s favoured theme till recently, domestic consumption, may take a backseat as fund managers shift focus to the battered shares of India’s export-driven companies buoyed by the rupee’s recent decline against major currencies.

Textiles, auto ancillaries, dyes & chemicals, software and pharma for potential winners are now starting to loom large in the plans of most fund houses.

Export-based themes are tactical bets over the next one year, because the rupee depreciation against other currencies make us more competitive and their stock valuations are also cheap, said Anand Shah, chief investment officer, BNP Paribas Asset Management India

The rupee has fallen almost 30% against the yuan so far this year and about 20% against the yuan since early August, when the Indian currency started weakening. Fund managers are betting that the fall will boost volumes of Indian products as a stronger yuan could squeeze margins of Chinese exporters, there by forcing them to bring down sales.

There is a real opportunity for exports to pick up like in the 90s. The rupee’s depreciation has set the platform for this, said S Naren, chief investment officer, ICICI Prudential Asset Management.

Shares of exporters have been out of investors’ radar in the past few years, as they were betting on India’s consumption story, thanks to its bulging middle-class and lower interest rates. Shares of consumer goods, auto and consumer durables, among others, benefitted from the hype surrounding them, but investors are now shunning these stocks because of pricey valuations and worries that higher interest rates are impacting demand.

The argument to buy export-oriented stocks is strong, partly because consumer stocks are trading at abnormally high valuations and are over owned, said Sandip Sabharwal, chief executive officer-PMS, of Mumbai-based broking firm Prabhudas Lilladher. Historically, it is seen that such high valuations never sustain, he said.

Consumer goods stocks are now trading at 30-35 times 2012-13 estimated earnings while shares of companies in textiles, auto ancillaries, engineering are trading at 8-12 times 2012-13 estimated earnings. The Sensex is at about 13 times 2012-13 estimated earnings.

Among top textile stocks. Alok Industries. which has fallen over 37% so far this year, is trading at four times 2010-11 earnings per share, Bombay Rayon, which has risen 30% so far this year, is trading at 13 times 2010-11 earnings per share. Among chemicals, Atul, which has fallen 20% so far, is trading at five times 2010-11 earnings. Leather product exporter Mirza International is trading at four times 2010-11 earnings per share.