Global macro uncertainty creating pockets of opportunity for India: Hari Shyamsunder

Time of India

15-05-2025

Tired of too many ads?
Remove Ads
Tired of too many ads?
Remove Ads
Tired of too many ads?
Remove Ads
"It has led to certain slowdown whether it is on the investment side, it led to certain pick up in consumption in terms of front ending of consumption at least in the US markets for sure," says Hari Shyamsunder So, over the last 45 days or so, we have gone through a lot of noise in the markets and some of that noise is definitely settling down now whether it is on the tariff front or whether it is on the border as well, we have seen a lot of noise around some of the news coming out of there. But now that some of that dust is settling down.It is back to looking at the numbers which are coming out. The Indian markets have been in a correction since September of last year and some of the reasons why the correction started have not yet been fully addressed whether it is a slowdown in economic momentum or whether it is the earnings being cut pretty sharply last year for FY25 in particular.Some of those still are being fleshed out. So, I think that is where we are. We are back to looking and focusing intensively on the numbers which are coming out, particularly the quarterly numbers and we are looking for the trends coming out of the end of FY25 and trying to get some signals as to what that means for the next year as well.I think which way you cut it, it looks like some of the impact of the tariff wars is going to be negative at the margin at least. So, it has led to certain slowdown whether it is on the investment side, it led to certain pick up in consumption in terms of front ending of consumption at least in the US markets for sure.But what this has just meant is that the overall uncertainty and the price increases are not good for consumption on the US markets. In addition, what we have seen is that generally all-around uncertainty has not fared well for the overall markets. But if we look past some of these, then Indian markets do stand to gain in some parts at least.We have seen I mean, some news on the electronic side, on the mobile phone side of companies looking to shift some of the supply chains to India some cues from there and get a bit more positive on some of the opportunity which could emerge as a result of some of the global turmoil which is happening. India has not been really too great on manufacturing, in terms of percentage of GDP at least.They have lagged our neighbours and some of the other emerging markets. This could be a good time for us to cover up some of that gap at least.So, the way to really look at it is that that we need to look at the trends and how this has been shaping out over the last few quarters. Post Q2 we saw a sharp cut in the earnings for the markets. And if you look at the kind of beats to downgrades really, what we have seen is that now at least the beats to misses at least has been a bit more stable in this quarter, that is really the best I can speak about this quarter.But what we have also seen is that the upgrades to downgrades are still not looking really favourable. What that means is that for next year the earnings continue to be cut. FY26 earnings are continuing to be cut.So, in FY25 we saw a sharp cut. We were expecting at the start of the year about 15% growth , that is landing up in maybe a high-single digits. Now going into FY26 we started off with that kind of an expectation again and at least heading into it at the start we are front ending the cuts which means that well, as long as the earnings are continuing to be cut and pretty sharply in some cases, what that mean is that it could serve as a lid for the markets.Well, it continues to be the earnings. I mean, the earnings momentum has not really picked up. Well, we can say that the economic momentum has bottomed out. We have seen enough signs of that in the Q3 numbers, and the Q4 will also continue to affirm that expectation that the economy at least is bottoming out.But on the earning side what we are seeing is that well it has bottomed out, but the economic momentum is not as strong as we would like to see it. Across the sectors if you look at it, we are getting into a market which is very bottom up. We are finding ideas in sectors, but broad theme are a bit harder to come by. It is really getting down to stock selection in each of the sectors.That is a great question and unfortunately, the answer is going to be very selective because we can go across sector by sector and it is hard to find broad sectors which are very cheap.One part which we do think still offers relative value continues to be the private banks and that is one place where we are positive and overweight on.The other places what we have been looking at is doing a bit of growth adjustment on the longer term. So, whether it is something like a consumer services, there we have been adopting an approach of looking at where there is a bit of temporary disappointment on the numbers and those are the kind of opportunities which we are then looking to lap up because over the longer term we are pretty clear that the Indian consumer is changing its habits, it is moving more towards consumer services to more towards consumer discretionaries and what that means is that that offers up opportunity if you look past the near-term, short-term disappointment.So, it is really about identifying growth in this market where you are more confident about shifting growth patterns rather than maybe just looking to hunker down purely into value.