The discussion began with the broader impact of the new labour laws and whether they mark a meaningful shift for businesses.
“No, the labour laws, I mean, as long as it is pro-business and at the same time takes care of the labour security, it is in the right direction and that is what we are seeing clearly and that seems to be the case,” Lakshmanan said. He added that the reforms would affect businesses differently, with some likely to benefit more than others. “Not necessarily we have to play on each event, but we believe as long as it is positive for the business, it should be overall positive for the markets.”
The conversation then moved to manufacturing as a structural theme—an area that has gained increasing relevance as India positions itself more firmly in global supply chains, especially with the possibility of an India-US trade deal at some stage.
“I mean, clearly manufacturing has been an area of focus for the government as well and that is something we need to clearly work on to create a lot of jobs,” he said, highlighting the demographic advantage India enjoys. From autos to pharma, chemicals to EMS, multiple verticals stand to benefit. But Lakshmanan emphasised that his approach remains fundamentally bottom-up: “On bottom-up space basis we have exposure in most of these spaces right from pharma, chemicals, EMS, autos, and so on.”
Global markets, particularly the US, continue to cast a long shadow on domestic sentiment. With assumptions around the Fed’s next move and profit-taking in the Magnificent Seven, the question is whether India can hold its ground if volatility spikes abroad.“The difference is, I mean the top seven companies are in very good health. They have generated a lot of cash flows,” he noted while acknowledging ongoing debates about whether an AI bubble is brewing. However, he cautioned that a sharp correction in the US could still spill over into other markets, including India. At the same time, he pointed out that emerging markets today appear relatively attractive compared to the US—and India, despite being slightly expensive, offers better entry points than it did a year ago thanks to valuation cooling and a softer rupee.As for the pockets to steer clear of, Lakshmanan was unequivocal. FMCG, he said, is losing its sheen because growth has structurally slowed even as valuations remain steep. “We are not seeing many of these companies again going back to very high growth…” he pointed out. Power utilities, too, are flashing caution signals after a steep rerating that does not align with their long-term return profiles. “Many of these utilities do not make very high ROCs or very high ROAs,” he said, adding that the sector’s recent multiples were influenced by a short burst of high growth that now seems to be normalising.
Taken together, Lakshmanan’s views suggest a market at an interesting inflection point—buoyed by structural reforms and sectoral opportunities, but still exposed to global tremors and valuation concerns. For investors, the message is clear: stay selective, stay bottom-up, and stay wary of pockets where optimism has run ahead of fundamentals.
