Market ready for next uptrend as growth revives: Ashi Anand

Indian stock markets have spent almost eighteen months in a sideways move, and according to Ashi Anand, founder and CEO of IME Capital, this consolidation phase has been shaped by a mix of headwinds: weak growth, high interest rates and geopolitical uncertainty. But the story gradually gets better. Anand notes that growth indicators have strengthened significantly over the past three to five months. Broader market gains for the latest quarter came in at 14-15%, commentary across sectors has become more optimistic and a series of demand-boosting measures – VAT cuts, income tax cuts and lower interest rates – are starting to work their way through the economy.

“Growth is starting to come back. After many quarters, some signs of optimism emerged from the recent quarterly earnings season. While you are still single digit on the Nifty, the broader markets will see headline earnings growth of around 14-15% and, importantly, the commentary in terms of an improvement in growth prospects seemed a bit relatable,” he said.

With global and US Fed interest rate expectations turning favorable and domestic consumption showing the first signs of revival, Anand believes the market could be approaching the next upward phase. Still, two risks remain: the unresolved US-India trade deal and pressure on the rupee. A favorable outcome for both could significantly improve investor sentiment.

In terms of positioning, Anand’s flexicap strategy remains anchored in domestic themes. The digital ecosystem is a core consideration, followed by a significant allocation to banks. He sees value across the financial sector, both in long-term companies like ICICI Bank, Kotak Bank and HDFC Bank, as well as value names like SBI, Axis Bank and IDFC First Bank. With NIM pressures and asset quality challenges largely behind him, he expects a stronger earnings trajectory from lenders.

“We’re staying away from things that have to do with the world. We just believe there’s a lot of uncertainty around trading, around the currency, around different moving parts. And also capital goods is a space where we had very healthy exposures here. We’ve been reducing them over the last year. Valuations were up, but we’re waiting for the underlying growth momentum to return,” he said.

However, Anand is cautious on global cyclical factors due to trade and currency uncertainty. He is also selective on the pharma space, highlighting the challenge posed by the decline in Revlimid-linked profits for several generic players. IT remains a point of vigilance given US economic uncertainty, slowing growth and unclear risks of AI disruption. Capital goods, while structurally strong, face valuation headwinds. In digital investing, Anand acknowledges the unusually high concentration of his fund, with five stocks making up 90% of the portfolio. This, he believes, is not caused by limited options, but by strict filters around competitive moats and long-term dominance. Upcoming digital IPOs can help diversify exposure without sacrificing quality.

For classic companies like Asian Paints, IndiGo and Page Industries, Anand believes their trade moats will remain intact. The challenge, however, lies in the inflated valuations that emerged during the years when capital chased only a handful of high-quality names. As earnings normalize, he expects valuations to correct, keeping these stocks under pressure despite strong fundamentals.