We want to understand your general outlook on where the market is headed. Given the kind of numbers we saw yesterday from Nifty 50 majors—especially L&T and Asian Paints—things seem to be shifting, at least based on the positive commentaries and robust results. What’s your take on where the market could be headed in the near term?
Anshul Saigal: Yes, it was quite a positive surprise from the infra bellwether, and the commentary from the paints bellwether was also encouraging in certain segments. If you look at L&T’s numbers, the order inflow trajectory is clearly very strong, and their margin guidance for the current year indicates an expansion over last year. Both of these developments are quite positive, especially in an environment where the broader market is tepid—or I should say, skeptical.
Now, how these stocks open will further reflect the market’s mood. We’ll need to wait and see how the open plays out.
As for the paints segment, over the past two years we’ve seen heightened competition and generally muted expectations, which have been reflected in stock price performance. However, a small shift began in the previous quarter, and that seems to be continuing into the current one. Expectations in certain segments appear to be improving. Additionally, it looks like competitive intensity is easing slightly, and general market sentiment is improving. All of this bodes well for stocks, particularly when expectations are low. So, while we’ll have to see how the open pans out, it does seem like we may be near the bottom in terms of expectations for this segment as well.
What’s your takeaway from Asian Paints’ commentary? There’s a lot to unpack—they’ve talked about competition, rural and urban demand, and overall, things seem to be looking up.
Anshul Saigal: Yes, if we look at this quarter not in isolation but as a continuation of the previous one—and if you listen to the commentary from not just this company, but also other listed paint players—it becomes evident that while it’s been five or six quarters since the new entrant disrupted the market and triggered anxiety in the sector, gross margins haven’t been materially affected.
The first impact of higher competition is usually on pricing, which is reflected in gross margins. But that hasn’t really happened. There has been a marginal decline, yes, but it’s far from a doomsday scenario.
However, over the past two to three years, the stocks have largely underperformed. Some have corrected meaningfully—this particular company by about 30–40%, and others by as much as 50–60%. Now, if you listen to the latest commentary—both from this company and others—it looks like volume declines in both rural and urban segments may have bottomed out, and a recovery could be on the cards.
If the company is guiding for stable margins, that suggests competitive pressures are easing, expectations are low, and conditions are improving—a powerful combination that bodes well for the sector overall.
Are you still adding any positions based on earnings?
Anshul Saigal: Firstly, I invest for my own account and my family’s investments, so I wouldn’t recommend specific stocks. But broadly speaking, the banking and financial space looks quite interesting right now. Valuations are reasonable, and the earnings trajectory appears to be picking up. Of course, there are a few banks or stocks showing weakness in earnings, but overall, the sector seems well-positioned for the next two years, with a favourable risk-reward setup. In other words, the potential upside outweighs the downside at current levels.
In the NBFC space particularly, there are strong demand tailwinds and now greater regulatory clarity—which was missing for most of the last three to four years. It’s quite clear that the regulator wants liquidity to flow into this space, as it’s crucial for last-mile credit delivery in the economy. So NBFCs, especially housing finance companies, look promising right now.
Another interesting trend we’re observing is in distribution. After the implementation of GST, we saw a shift from unorganised to organised players in both retail and manufacturing. However, that trend didn’t play out in the distribution part of the value chain. That is changing now—small, unorganised distributors in sectors like building materials, metals, and pharma are losing market share, while organised distributors are gaining. That’s a space with strong growth tailwinds and one that the market doesn’t fully appreciate yet.
Beyond that, there are opportunities in select capital goods companies, auto components, and others. So, yes—there are plenty of opportunities, but they are more stock- and segment-specific rather than broad-based across the market.
