Anand Shah from ICICI Prudential AMC in an interview to ET Now explained that fundamentals are balancing out. “There has been a benign monetary policy and some fiscal support, like GST and income tax cuts. But slowing global growth and US tariffs are putting pressure on export-oriented businesses. Overall, the economy is chugging along without moving strongly in either direction.”
Capital flows have also contributed to market stability. “We have strong domestic flows, but foreign outflows continue. At the same time, there is ample supply from IPOs, QIPs, and private equity selling. It has been a balanced market, leading to balanced moves.”
Cautious Outlook on IT Sector
On IT services, Shah noted that recent moves by companies like TCS are unlikely to shift fortunes immediately. “IT services have underperformed for more than three years. Growth depends on global spending picking up. We remain underweight IT, but it could become attractive later.”
Gold, Silver, and Alternative Assets
Shah emphasized the importance of multi-asset portfolios amid global uncertainty. “Gold, silver, bitcoin, and commodities benefit from elevated inflation and low interest rates. Investors should have exposure to fixed income, precious metals, and equities in the right mix.”
Earnings Growth Outlook
Historical context is key to understanding current earnings trends. “Corporate profits peaked in 2007, bottomed in 2020, and then saw 35% growth for four years. Since last September, growth has been 8–10%, still below the earlier pace. Earnings growth should start showing up in the second half, but more meaningfully in FY27.”Sectoral Themes Driving Recovery
Shah highlighted metals, financial services, and consumer services as key sectors. “Metals will benefit from protective policies. Financial services are seeing structural growth opportunities. Within consumption, services like telecom, aviation, and finance are growing faster than goods.”Consumption: Services Over Products
He noted a shift from products to services in consumption. “FMCG growth is low due to full penetration, and two-wheelers are plateauing. GST cuts may boost auto growth, but shifts from entry-level cars to SUVs and ICE to EVs will keep margins under pressure.”
As India navigates slowing earnings growth and sectoral shifts, Shah’s insights underline a cautious but strategic approach for investors seeking diversified exposure across assets and sectors.
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