While the influx of fresh listings provides investors with a wider array of opportunities, Bansal cautioned that selectivity is crucial.
He emphasized the importance of evaluating valuations and the track record of companies before investing, noting that only a few offerings—such as those from reputed groups or at attractive pricing—stand out in an increasingly crowded market. Edited Excerpts –
Q) Thanks for taking the time out. Western headwinds seem to have slowed equity markets. How are you interpreting the current situation?
A) It’s a pleasure. Yes, it has hurt market sentiments, and fears remain about any further measures that might be taken by the US. On actions announced so far, from a fundamental perspective, about half of India’s exports to the US of ~ $90 bn could be affected by the tariffs.
Though the impact on specific sectors would be high, it is likely to be less than a percent on the overall GDP. With time, this is likely manageable as trade deals with other countries are finalized and India hunts for newer export markets.
Improving relations with China should also help. The impact of the H-1B visa fee hike seems marginal on the IT sector.
Various measures by the government and the RBI are growth supportive and thus will have some compensatory effects. Further, the possibility of US tariffs being eventually brought down remains.
Q) The H-1B visa may not have a large impact on IT companies’ balance sheets, but it could be a significant sentiment hit. What are your views, and how will this affect the future environment for IT companies?
A) We have been negative on the IT sector for a while. An uncertain economic growth environment could impact discretionary spending by US corporates, leading to demand and growth issues.Over the long term, AI might pose its own set of challenges for the industry, impacting multiples. So, while stocks have corrected and there could be intermediate trading rallies, we continue our underweight stance.
Q) The silver lining for D-Street could be that we might close September on a positive note after falling for the past two months. What are your expectations for the festive October month?
A) Very difficult to say how markets could behave in the short term. Q2 results are likely to be weak due to demand postponement on the back of GST cuts.
While this is known, the market would take cues from corporate commentary on the demand environment.
Sentiments will be influenced by developments around the US trade deal and any other tariff-related news flow.
Valuations now are more reasonable with markets trading at 20.5x one-year forward P/E multiple, about the last 10-year average levels.
Q) Earnings have been lacklustre over the past few quarters. The government has done its part with the GST bonanza. When do you expect the benefits to start reflecting on company balance sheets?
A) H2 onwards, the earnings are likely to pick up on the back of GST rate cuts, benefits of income tax reduction, lower interest rates and muted inflation. Good monsoons, the festive season, benign liquidity, more reform measures and a pick-up in government ordering and spending are also likely to aid growth.
Q) FIIs seem to be selling in a hurry. It looks like there are two strong trends on D-Street – fear from FIIs and FOMO from DIIs. Meanwhile, money has been flowing more into primary markets than secondary markets. Do you see this as a concern, or just part of the market cycle?
A) FII selling has been driven by negative developments around tariffs and geopolitics, as well as due to the weak earnings delivery in the context of elevated valuations on a relative basis.
As India and the US finalize a trade deal and as earnings visibility improves, FII flow could come back, given that markets have also corrected.
Money flowing into good primary market issuances is positive. More companies coming up for listing during buoyant times is a part of the market cycle. Investor expectations of quick listing gains, though, are an area of concern.
Q) Which theme do you think will perform better in FY26-27 – growth or value?
A) Our investing methodology is more focused on bottom-up stock picking of buying companies with good growth prospects at reasonable valuations for the long term, rather than focusing on styles per se. We believe there are stock-specific opportunities out there across these styles.
Q) How are you interpreting the new IPOs hitting D-Street?
A) For the markets as a whole, it is a good thing as the choice basket increases with more and newer businesses becoming available to investors. A number of IPOs are of relatively smaller-sized businesses, and many of them are fully priced. This makes us selective.
Anyways, we are generally not focused on IPOs due to a lack of listed history and demonstrated track record in the capital markets. Though there are exceptions, like in cases of outstanding businesses, businesses of reputed groups or issues at very attractive valuations.
Q) We are seeing Rs 28,000 crore a month in SIPs. Are Indians really investing, or just automating without a plan? What are your views?
A) SIPs have the concepts of averaging and discipline built into them, which are important ideas in investing and generally work out over a long period of time.
The expectation should be of reasonable returns rather than an extrapolation of the high returns which might have been experienced till about a year ago in the post-COVID times.
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