Edited fragments from a chat:
What is your reading of the current market mood? Investigators underestimate the appreciation and profit risks or overbraak optimism of GST, trade agreements, etc.?
So far we have seen these tax trends in recent years. The SIP flows of domestic investment fund last year remained largely resilient against the background of rather lukewarm aggregate income growth, increased ratings and a market collection between September 2024 to February 2025. Some of the recent optimism of the consumption of the consumption that has a large number of meetings in some sectors. On the other hand, there is a clear pessimism in sectors such as this one because of a negative news flow.
In a market where gold and silver make more noise than shares, how should an investor think about the allocation of assets between shares, gold/silver and debts?
For most Indian investors, domestic shares still have to be the core allocation and more if one has a longer horizon, because starting values ​​become less important in longer periods. Tactically increasing allocation to debts seems to be a good option at the moment, given the increased stock values. It is difficult to attribute a fundamental value to precious metals and, since both record rides have achieved last year, I would rather no longer assign 8-10% to gold and silver.
Which themes or sectors do you think could yield too much return in the coming 5 years? Has GST 2.0 changed your outlook on specific sectors?
The consumption is ~ 60% of GDP. Since massive consumption has struggled in recent years in recent years, partly due to lower wage growth and rising household debts, the monetary relaxation in combination with lower loads should be a boost for mass consumption -connected sectors at least for short to medium term. We estimate that due to the income and gst tax reductions in combination with lower interest rates, the government has yielded a consumption stimulans of RS 4.6 Lakh Crores or ~ 1.3% of GDP that is considerable. Among other things, we like sectors from healthcare services where rising penetration should be a positive for hospitals, diagnostics and health insurance in the next 10-15 years. Companies in insurance, RTAs, deposits and asset management offer attractive plays on the structural trend of financial assets that are underway. Our investment approach, however, remains agnostic sector.
What is your advice for investors who are in cash and wait for a correction – patience or participation?
Investors must look for diversification of activa class if they have a lower risk tolerance or if they are close to their financial goals. For investors with a longer horizon, participation in equity, even under increased ratings, offers the best option to beat inflation. If someone has been invested in the last 5 years, then it is a good time to balance the portfolio and to tilt more to defensive assets such as debts.
Do you think that the ratings are currently stretched in the middle and the small cap, or is there still room for the top?
At the moment, broad index exposure in small and midcaps is evoking for caution, and a more selective, bottom-up approach is justified and valuations of in the small and middle-cap indices, appear to be both in absolute terms and relative to their historical averages. However, it is just as important not to generalize from aggregated ratings, because in blacksmith room you can still find well-running, profitable and high growth companies from a wide pool of more than 700-800 shares. Apart from the next 1-2 years, I think there is a considerable space for considerable returns in blacksmith if a more selective, valuation-conscious approach is used that focuses on company fundamentals, rather than broad themes.
Auto shares have seen a sharp rally since the announcement of 15 August about GST rationalization. How comfortable are you with valuations in car shares? Do you think we are at the start of a multi -year autocycle?
The ratings in the sector were brought above historical averages after the recent rally and it seems that the market bakes a lot of optimism through GST speeds. Since most companies have chosen to pass on the tax decline to end customers, the appreciation that probably reflects the expectations of a persistent higher demand, which is disputable if the wages of white borders and the growth of employment remain fragmentary. However, there are well -run companies within both two -wheelers and four -wheeler OEMs, as well as within Auto -supporting space that can justify these premium ratings in the long term.
In recent months we have seen a sustainable delivery of new paper through sale by insiders, promoters, PE/VC funds and now IPOs. Can we blame the delivery pressure as one of the reasons for the underperformance of the Indian market?
Yes, to a certain extent. In the past four years we have seen domestic investors (MF+ BFI+ Retail) increase their interest in listed companies, while FPIs and promoters (including PE owners) have sold. In the past year we have broadly compared almost $ 70 billion in the stock stock with the inflow ~ $ 55 billion in domestic MFs. Against this background, secondary sale by FPIs combined with increased ratings in September 2024 and the delay of profit growth could explain, explain part of the underperformance.
The market seems to be baking in opportunities for profit recovery H2. Do you agree?
Yes, although I think that H2 retrieval of the consumption stimulus can be partially compensated by higher US rates, unless a trading deal is previously announced. NIMs of most banks would be under pressure as a result of reduction reductions. In my opinion there is a greater chance of broad profit growth in FY27 in cars, banks, NBFCs, telecom sectors, among other things.
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