ETMarkets Smart Talk - Missed the 2025 Rally? Don't chase—ease in with SIPs & structured debt: Puneet Sharma

Time of India

17-06-2025

In this edition of ETMarkets Smart Talk,
Puneet Sharma
, CEO & Fund Manager at Whitespace Alpha, offers a grounded perspective for investors navigating the post-rally landscape of 2025.
While many are grappling with a fear of missing out (
FOMO
) after sitting on the sidelines during the
market
's early surge, Sharma urges caution over emotion.
Instead of chasing momentum, he advocates a disciplined, phased approach—leveraging
SIPs
and structured
debt
strategies to steadily build exposure without taking on unnecessary timing risks.
Sharma also shares his views on market resilience, sectoral opportunities, and why domestic flows are now the backbone of Indian
equities
.
Q) How do you see markets in the medium-to-long term?
A) Honestly, the volatility in June doesn't worry me too much. It feels more like the market catching its breath after a fairly strong first half.
If you look under the hood, India's still a domestic-demand-led story, and that engine's running steady. Other emerging markets have had a good run — partly thanks to currency moves and commodities — but we've had a more balanced, fundamentals-led path.
From a medium- to long-term perspective, I'm still constructive. We're in the middle of an earnings cycle that's holding up well, domestic flows are steady, and with policy continuity now behind us, I think the market has more depth than it's being credited for. Short-term underperformance? It happens. But the long-term direction hasn't changed.
Q) What's your view on the June MPC rate cut and what do you expect ahead?
A) To be frank, the 50 bps cut was a bold but well-calibrated move. It sends a clear signal that the MPC is leaning into growth now that inflation is more under control.
You could say they pre-empted global easing — which shows a certain confidence in our macro stability. That said, I don't think we're in for a deep rate-cutting cycle.
Maybe one more cut, but after that, it's likely to be a wait-and-watch. If food inflation picks up due to patchy monsoons or crude spikes, the RBI will need to stay flexible. So, I'd say: calibrated, not aggressive — that's the path I see.
Q) Which themes look attractive in this environment?
A) What I find really interesting is how the old labels — like 'defensive' and 'cyclical' — are being redefined right now. The way I see it, three themes stand out:
First, manufacturing exports — especially sectors like defense, capital goods, and engineering they're clear beneficiaries of the China+1 shift and global realignment.
Second, rate-sensitive domestic sectors.
Q) Will a normal monsoon support consumption and autos?
A) Yes, and quite significantly — especially in rural-focused segments. A good monsoon tends to lift agri incomes and unlocks discretionary spending.
Two-wheelers, tractors, even value-end appliances and staples — all stand to gain. We've already seen rural demand lagging a bit, so this could be a much-needed catalyst.
That said, the devil is in the distribution — how the rain is spread and how it supports the kharif season will be key. So, cautiously optimistic, I'd say.
Q) What's your take on flows — FIIs returning, DIIs staying strong?
A) It's been good to see FIIs turning net positive again especially with political uncertainty behind us and rate expectations easing globally. But we have to acknowledge: FII flows are fluid. They'll react to global yields, oil prices, and the dollar.
What gives me more confidence is the strength and resilience of domestic flows SIPs, long-only DIIs, pensions they're now the bedrock of this market.
Unless there's a major global shock, I don't see a sharp reversal. India is no longer just a high-beta EM play we're increasingly being viewed as a strategic allocation.
Q) Any sectors or themes to avoid right now?
A) To be honest, we're a little cautious on commodities and global cyclicals, especially those tied to China's industrial cycle. Visibility is low and the risk-reward just doesn't look compelling.
Also, some parts of the tech IPO pack still feel a bit ahead of themselves as valuations haven't quite aligned with profitability yet. The market's in a mood where it's rewarding stability and delivery.
So we're avoiding names that are still built more on promise than actual performance.
Q) Block deals and promoter selling — red flag or business as usual?
A) I think we have to view it in context. Yes, there's been an uptick in block deals and some promoter selling, but in most cases, it's just portfolio rebalancing or estate planning after strong wealth creation.
It becomes a concern only if it's paired with weak results or a change in governance tone and we haven't really seen that.
In fact, most of these blocks are being picked up by long-term institutions, which speaks to the underlying confidence in those businesses. So right now, I'd say it's business as usual.
Q) Small & midcaps vs large caps - where do you stand now?
A) Valuations in the small and midcap space are definitely rich in parts. There's quality out there, no doubt, but you have to be selective. We're avoiding names where momentum has pushed price far ahead of fundamentals.
Focused bets on companies with clean balance sheets and earnings visibility still make sense. On the other hand, large caps, especially in banks, capital goods, and industrials, are offering better relative value right now. A balanced allocation makes sense in this phase with a little more tilt toward quality large caps.
Q) What's your advice for investors feeling FOMO after sitting out the early 2025 rally?
A) To be honest, this happens every cycle. And the worst thing you can do is react emotionally. If you've missed the first leg of the rally, don't try to time the top or bottom staggered buying is your best friend here.
SIPs, tranches, even simple discipline in allocation can help ease in without taking on timing risk. For those still uncertain about equity timing, allocating a portion to structured debt strategies can be a smart interim approach.
It allows your capital to work earning steady, low-volatility returns while you gradually build exposure to equities with greater confidence.