Edited excerpts:
How do you see the Indian equity markets shaping up over the next 12–18 months?
Markets, in the near term, are driven as much by liquidity and sentiment as by fundamentals. In that sense, the market seems to be in a ‘prove it’ mode, companies need to back up the expectations built into their stock prices. If they do, we could see a more sustainable upside. If not, corrections would be healthy and probably necessary.
Many investors found the Q1 earnings season below expectations as signs of broad-based growth was missing. Do you think earnings recovery will come in Q2 or Q3 onwards?
Q1 earnings did leave many investors a bit underwhelmed, largely because we didn’t see broad-based growth. Strength was limited to a few pockets. So while we’re certainly hopeful of recovery in the coming quarters, it may not be a uniform rebound. Q2 could still be patchy, but Q3 onwards we should get a clearer picture of whether earnings growth is broadening out or still narrow. We expect, this cycle will likely be more sector-specific rather than a blanket recovery across the board.
Which sectors do you believe will lead the next leg of market growth, and what’s driving your conviction in them?
Power utilities, manufacturing and consumption are some of the sectors we are looking at and have been for some time now.
In power utilities, the structural demand story is intact, supported by push for renewables, transmission upgrades, and higher power offtake across states. We’ve already seen strong numbers from players in this space, and visibility looks strong. However, the valuations are stretched and better to wait for a correction to add them in the portfolio.
Manufacturing is another key theme, driven by government incentives under PLI schemes, import substitution, and global diversification. Order books in industrials and capital goods remain healthy, giving us confidence.
On the consumption side, while rural demand has been patchy, government measures such as tax reforms, higher exemption thresholds, and GST rationalization should begin to reflect in volumes over the next few quarters.
Are there any valuation trends or signals in the current market that investors should be mindful of?
Valuations have been an active discussion for well over a year now, and we’ve also seen meaningful corrections in certain pockets. Stock prices have built in significant expectations and companies now need to deliver strong earnings growth to justify those multiples.
Quality businesses with strong balance sheets and visible growth drivers continue to command premiums, but we are also noticing greater investor sensitivity to even the slightest earnings misses.
If you had Rs 10 lakh to invest in the market right now, how would you spread it across gold/silver, equities and debt?
There’s really no one-size-fits-all answer here. Asset allocation always has to reflect an investor’s financial goals, time horizon, and risk appetite. That said, what we can say with certainty is that a diversified portfolio is essential.
Equities remain the long-term growth driver, but pairing them with debt provides stability and cash flow, while gold has historically acted as a hedge against uncertainty and inflation.
Lastly, what’s the one contrarian idea you’d back for the next 12 months?
Too early to say, but IT sector is slowly showing signs of bottoming out. The valuations have already priced in a lot of pessimism. What’s interesting now is the mid-tier IT companies, who are trying to carve out niches in areas like AI services and automation.
While AI-related revenues aren’t yet material, once these start contributing meaningfully, the market will notice, and the rerating could happen.
