Edited fragments from a chat:
How do you see the Indian stock markets in the next 12-18 months?
The Nifty50 is only marginal positive on an annual basis and is one of the weaker -performing stock markets worldwide in this period. This trend is driven by a modest income in FY25, and FY26 is also a relatively faint year, with expectations of only a figure of growth.
That said, the prospects for FY27 and after that seem more encouraging. We believe that the full impact of the monetary and tax measures announced in recent months will begin to reflect positively on the income of the company. Ultimately, stock markets are driven by income and, more importantly, they are future -oriented in nature.
Against this background we see a fairly constructive prospect for share efficiency in the next 12-18 months. At the same time, we remain aware of possible challenges, including the recent escalation in American rate -related developments. We will also keep a close eye on, because they have been the most important source of resilience despite weak income. For now, flowing will remain strong despite the insufficient return in the past 12 months, but the conviction of investors can be tested if this correction phase extends longer.
Many investors found the income season below the expectations of the first quarter, with the expectations, with signs of broad growth that was missing. Do you think the profit recovery will be in Q2 or Q3?
Q1 FY26 Income were lukewarm but largely in line with expectations. Large caps delivered high PAT growth with one digit, while MidCaps registered 20%+ growth, powered by a strong rebound in the income of energy companies. Small Caps reported a decrease from the year after year as a result of weak performance of lenders in this segment. What more concerned us were the modest prospects in management comments, with very little optimism on future growth.
We expect that the income of Q2 will remain weak, driven by several factors:
- Postponement of the question prior to the recently announced GST rate rates
- The impact of higher American rates
- Softer performance of banks, because the full effect of the Rate reduction of June leads to further margin compression
From the third quarter, however, the outlook becomes much more constructive. We expect a strong momentum from October, especially in segments that are expected to benefit the most from GST reductions-such as passenger vehicles, two-wheelers and air conditioners. Banks should also see margin support from the phased CRR section from September. A favorable solution to the tariff problem would be an extra positive catalyst. In this context we consider Q2 as the likely bottom-out quarter for company profits, with a strong revival expected from the third quarter.
Which sectors do you think that the next stage will lead to market growth and what drives your conviction in it?
We have been constructive about the consumption theme and the recent announcement of GST -Knijden has been constructing that image for some time. The scale of the cutbacks is useful – around RS 1.8 trillion – and the resulting price reductions for certain products can be considerable.
Moreover, the affordability of consumers has been meantfully improved, first supported by tax reduction in the Budget of the Union and then by substantial interest rates of the RBI. All in all, this almost creates a scenario “Goldilocks” for consumption-driven companies, which releases the road for broad growth gear in the sector. That said, we keep thinking of valuations and we will continue to assess opportunities on a case -by -case basis.
Pharma is another sector that we are positive about, despite a headwind of potential American rates. Over the years, Indian pharmaceutical companies have built up scale and cost benefits that are not easy to replicate. The sector has seen a time correction in the last 12 months, despite the profit boost of a blockbuster drug that ranges patent in the US, some Indian companies can be important beneficiaries of the fast-growing weight loss market.
Are there valuation trends or signals on the current market that investors should take into account?
Valuation for large CAP companies remain reasonable, with the Nifty50 trade with about 21 times a year in advance of Income-Lechts a modest premium for long-term averages. MidCap and Small-Cap ratings, on the other hand, have been relatively increased, supported by expectations of stronger profit growth compared to large caps in the next two to three years.
In terms of sector, the valuations have been used meaningfully, with some large caps now trading at multi -year lows. However, this correction coincided with an uncertain prospect in the sector, which explains why the ratings do not return to mean quickly.
If you currently had RS 10 Lakh to invest in the market, how would you spread it over gold/silver, shares and debts?
The answer to this question really depends on the financial situation of a person and the appetite of the risk. Such decisions can best be led by financial advisers who can assess the general profile of an investor.
The efficiency of different activa classes is usually cyclical, making optimum active spreads crucial for supplying superior returns on economic cycles. At the moment, between fixed -income values and shares, we believe that shares offer more favorable prospects. In fixed-income values, much of the benefit of the tariff-saving cycle seems to be priced, while shares have a more constructive view for the next 12-24 months.
Which sectors are best placed at the moment for the next 1-2 years?
As discussed earlier, under the cohorts of consumption, financial data, production, raw materials and export -oriented sectors, the outlook for the next one to two years seems to be the most favorable for consumption.
Raw materials and export -oriented sectors are created by the uncertain global demand environment by American tariff actions. Within the export -oriented cohort, however, we remain positive at pharmaceutical companies, as explained above. The production may not get the same incremental policy support that it has benefited in recent years. In the financial data, although valuations -in particular for banks -are reasonably reasonable, growth is limited by a low nominal GDP growth and the recent phase of margin compression after reducing repo speed is further weighed for profitability.
In this background, consumption companies stand out with the most promising growth benefits. That said, valuations in certain bags are stretched and investors must take this into account while they evaluate opportunities.
Finally, what is the only contrary idea that you would go back for the next 12 months?
Quick Service Restaurant (QSR) companies have brought matte growth over the past six to eight quarters, resulting in a sharp underperformance of the sector. We have exposure to some of these names and keep holding them because we see a fair chance of a change in the next 12-18 months.
The QSR segment in India is still in an emerging phase compared to other markets, and despite the recent phase of modest growth, we believe that these companies have a long runway. From the current level they have the potential to evolve into strong long -term connections.
(Disclaimer: recommendations, suggestions, views and opinions of the experts are their own. These do not represent the views of economic times)
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