Market cautious, not panicking; see opportunities in 4 sectors: Prashant Khemka

Time of India

09-05-2025

Prashant Khemka
, Founder,
White Oak Capital Management
, says global investors prefer stability, especially in regions with significant investments like India. Recent market dips suggest a cautious but not panicked response to current events. Opportunities remain across sectors like financials, healthcare, consumption, and technology. The focus is on bottom-up stock selection rather than top-down sector predictions, emphasizing individual opportunities.
The escalation of
India-Pakistan tension
saw the
VIX
spiking up about 11% yesterday. History tells us that this is at best a knee-jerk reaction. The equity markets will dust it off and pick it up again. But what are we staring at this time because the GIFT
Nifty
looks shaken up.
Prashant Khemka:
Situations like these cause uncertainty for the markets. As an Indian, certainly our prayers and thoughts are with the soldiers who are at the front in the midst of the action, but as far as the market is concerned, it is going to be a fast-evolving situation over the coming few days. How the situation develops from here, the market is going to react. Globally and in India, since the Kargil war, there have been a couple of instances which have de-escalated within a few days. Now, this one seems to be a little more intense than those instances and remains to be seen how long it takes.
But ahead of any other news or any other source, the market would tell us how the situation is and it was 1% down yesterday, about a percentage point down today. That seems to suggest that the market does not believe at this point in time, this is going to get out of hand.
There are tensions across the border, but FIIs are indeed showing resilience and for the past two to three days, when there was a bit of nervousness, the index did not perform that well. But in the cash market, the FIIs have been showing some resilience. Given the tensions, what kind of a sentiment can we see building up in their positions? What is the stance?
Prashant Khemka:
FIIs position can turn on dime. It can turn very quickly. It will also be a function of what the market does. The market has been resilient over the last three days and that has also given confidence to the foreign investors that this is nothing significant, nothing different from what has happened over the last couple of instances and they have not really been bothered too much about that. They are asking the questions, but they are not acting unnecessarily on it. But if the market were to react negatively, then they would become more nervous and we are likely to see that in the FIIs numbers.
Market is a forward-looking beast. Today you are seeing a knee-jerk reaction on the gift Nifty, but who knows maybe by afternoon we will cover all this of a downtick. But eventually, it is going to come back to basics. It is going to come back to what happens between Trump and China, how they maneuver on tariffs. The US-UK trade deal has been announced. What are the key triggers that the market is going to be working with?Also, we are in the midst of the earning season and it has been largely in line besides a few misfires here and there.
Prashant Khemka:
On the global tariff front, the news is positive, the developments are moving in the right direction. So, a month ago around this time, the markets were gripped with the volatility surrounding the tariff announcement. Since then, every incremental news has been de-escalatory if we were to use that word in this context.
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Will the escalating India-Pakistan conflict continue to rattle stock market?
From all sides including Trump himself, there is a dial back of the positions after the initial ramp up of tariffs between US and China. This week itself, first of all, there was the UK-India free trade agreement (FTA); we had a deal between the US and UK now. That sets the tone and it is a precursor to many such deals that we are going to see between the US and other trading partners. It is a positive from where we were a month ago.
We have come a long way on the global tariff front and that is a positive backdrop for Indian equity markets as well. The global backdrop ought to be positive over the coming few months particularly as tariffs were the primary concern over the last several weeks.
When we get to interact with some of the investors right there, there has been a bit of a nervousness within the retail investor pack. But since the market is looking forward to the developments, given that we hope for some bit of a resistance in the times ahead, which are the pockets where you are finding margin of safety at this point in time?
Prashant Khemka:
There are opportunities across sectors. We historically have tended to have higher allocation in sectors like financials, healthcare, and consumption, as well as technology and that is the case right now as well. This is more from the perspective of where we see bottom-up stock selection opportunities rather than some top-down view on which sector would do well versus others, which we do not think works in any market. It is a zero-sum game, but it is really identifying the best opportunities within each sector.
As an Indian investor, you do not want a neighbourhood in turmoil. Captain Gour was just talking about how politically sensitive Pakistan is getting and there is so much happening around us, what with the China-US dynamics, China-India dynamics, the world is in a flux right now. But as an India investor, how worried would you be with the turmoil that is happening in our neighbourhood and right across the border?
Prashant Khemka:
Certainly, the world is always in flux and things are always uncertain. It is just that at the point in time that you are in, it seems to be more uncertain than it was at any other point or most of the times in the past. But if you put yourself at any point over the last few years, the world is always very uncertain.
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Coming to the point that you are making about the neighbourhood, yes, global investors would want to see that the country is in peace time or business as usual. It is not common to have in today's day and age such conflicts while there are a few places that such conflicts are going on, but those places are not the ones where global investors typically have big exposure, be it Russia, Ukraine, or in the Middle East, these are not places where the global investors have big exposure. India is obviously where global investors have a very large exposure compared to at least these places. Naturally, there would be a desire for everyone to see normalcy return. But it is what it is and they would be watching carefully as would everyone in India.