ETMarkets Smart Talk: Focus on bottom-up stock picking - financials, defence, pharma, and specialty chemicals look attractive, says Paras Bothra
Tune in to hear where opportunities lie and how investors can navigate the months ahead with discipline and clarity. Edited Excerpts –
ADVERTISEMENT Q) We closed May on a high note but witnessed some volatility in June – is it geopolitical concerns weighing on sentiment?A) Yes, the volatility we are seeing is because of the geopolitical tensions emerging in the middle east and crude spiking up creating jitters in the markets.
Q) As we are about to end 1H2025, what are your expectations or assumptions for the rest of the year?
A) The rest of the year will see the surge in supply of papers in the primary market and the plethora of QIP and promoter block deals absorbing liquidity and capping market upside.Also, on the other hand there will be buoyancy in the market based on improved fundamentals because of interest rate cuts and ample supply of liquidity, normal monsoon boosting the economy and more specifically consumption.
Q) Are there any new or existing themes that are likely to do well in 2H2025?
ADVERTISEMENT A) Discretionary consumption is a theme which might gain momentum with lower interest rate and festive heavy second half.Themes like clean water, convenience services, airlines, govt policy supportive industries, digital advertising, hotels, tours & travels, selective industrial products & services, cooling products, financialization of savings, hospitals etc., seem to be riding on structural tailwinds and opportunities can be tapped in these segments when the market turns volatile and the valuation starts looking compelling.
ADVERTISEMENT Q) Geopolitical concerns weighed on crude oil in the past few weeks. How do you see crude oil moving in the near future and what could be the possible impact on earnings and GDP growth?A) Crude oil movement in the near future is more to do with war in the middle-east. But it may be short lived till the time tension between Israel and Iran is resolved.How long the skirmish continues is a fluid situation to predict. But any sign of restoration of normalcy will see supplies easing and crude oil prices coming down.
ADVERTISEMENT Crude oil price spike has an impact on Indian GDP and current account balance, but the dependency has reduced a lot with the passage of time and with the adoption in alternate sources of energy.
Q) In terms of valuation comfort – which sectors are on your radar? A) We are looking at companies more from bottoms-up and sectors like financials/NBFCs, capitals goods, pharma, discretionary consumption, defence, tours & travels, hospitality, hospitals, manufacturing/electronics, speciality chemicals are few sectors which look good.
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Q) How are FIIs looking at India amid falling interest rates globally?A) FII's will certainly look at India positively given what is happening in the developed market. Increasingly the emerging market is becoming attractive with rising/elevated bond yields in the US and given other macro headwinds in developed markets. Though we are yet to see a surge in India dedicated foreign funds.
Q) If someone plans to allocate say Rs 10 lakh (30-40 years) in 2H2025 – should they put fresh money to work? What is the ideal asset allocation? A) If anybody has a 30-40 years horizon of asset allocation, I think rather than timing the market, it is the discipline of uninterrupted SIP which will work wonders in compounding wealth. Equity as an asset class can be seriously looked at, because for such a long horizon, it will be for the younger generation in their twenties and having a risk appetite to digest volatility.
Q) How is the rate trajectory looking from the RBI? Do you think the front-loaded 50 bps cut was enough to boost consumption?
A) Yes, it seems rate cut is frontloaded and with the boost in liquidity it will support consumption.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
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Time of India
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- Time of India
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Explore courses from Top Institutes in Please select course: Select a Course Category Others Product Management Degree Data Science Data Analytics Operations Management CXO Cybersecurity Design Thinking Public Policy Healthcare MBA Data Science Digital Marketing Technology healthcare Artificial Intelligence PGDM MCA Management Leadership Finance Project Management others Skills you'll gain: Duration: 9 months IIM Lucknow SEPO - IIML CHRO India Starts on undefined Get Details Skills you'll gain: Duration: 28 Weeks MICA CERT-MICA SBMPR Async India Starts on undefined Get Details Skills you'll gain: Duration: 7 Months S P Jain Institute of Management and Research CERT-SPJIMR Exec Cert Prog in AI for Biz India Starts on undefined Get Details Skills you'll gain: Duration: 16 Weeks Indian School of Business CERT-ISB Transforming HR with Analytics & AI India Starts on undefined Get Details A) Yes, in 2HCY25, domestic equity markets begun trading on the volatile note on the back of uncertainties on global trade deal, as US president Mr Trump extended the earlier 90 days deadline which was supposed to end on 9th Jul'25 to 1st Aug'25. Investors are waiting for clarity on the bilateral deal between US and its major trading partners to assess the impact of tariffs on the global business set-up and pursuant impact on the different sectors across the globe. For e.g.; tariff of 15% on Japanese cars put American car manufacturers on weak footing as they may have to shell out 50% more on commodities like steel, copper for Canadian production, 25% more for Mexican production etc, thereby leading to competitive advantage for Japanese car manufacturers. Live Events Back home, expectations for 1QFY26 earnings season are tepid in terms of growth as most of the heavy weight sectors like IT (due to slow execution of the deals), Banks (NIMs under pressure; asset quality issue on unsecured book leading to higher provision etc), Consumer Staples (low single digit volume growth due to impact of slowdown in urban pockets) etc are likely to report single digit earnings growth. Having said that, certain pockets like Cement , AMCs, Hotels, Hospitals, Ports, EMS etc are likely to report decent double-digit growth. On valuation front, India is trading at a relatively expensive valuations (FY26E PE multiple of 21.4x) vs MSCI World (FY26E PE multiple of 20.7x) & MSCI EM (FY26E PE multiple of 12.7x), thereby leading to selling by FIIs. On domestic front, supply of paper (IPO, PE/Promoters selling, QIP, Pref etc) has also sucked liquidity thereby adding to volatility in the secondary market. Q) IPOs have picked up recently, but EY report highlighted that Indian IPO activity in the first half of 2025 recorded 108 deals raising US$4.6b, demonstrating market resilience despite a 30% decline in transactions. A) There were no IPOs in the month of Mar'25 and Apr'25 and primary market witnessed gradual recovery from month of May'25, as the sentiments began to improve with fear of unknown event of Trump's tariff tapering off. As we speak, in the last 10 days of July'25, 10 issues are slated to hit street for IPOs. Going forward, as the overhang of Trump's tariff ebb, we expect very robust IPO market during 2HCY25. Q) What is the initial sense you are picking up from the June quarter results, which have started to come out? A) Result season so far has been a mixed bag. Let us discuss sector by sector. On positive side, companies from sectors like Hotels, AMCs, Cement, EMS, Ports etc have reported strong to decent set of numbers with optimistic outlook. On the other hand, IT sector continues to grapple with global uncertainties thereby leading to inline to disappointing set of results with weak growth commentary. Banks so far have been a mixed bag with likes of ICICI Bank, HDFC Bank reporting inline numbers with no negative surprise whereas Axis has disappointed the street. QSR and consumer staple businesses continues to report tepid growth on the back of slowdown in urban markets. Q) Is the current equity market rally largely liquidity-driven, or are there sufficient earnings fundamentals to back the optimism? A) Equity markets are blessed with robust domestic liquidity thereby leading to sharp recovery post correction. Nifty50 companies have delivered double digit PAT CAGR between FY20-FY24 period and now earnings growth in FY25 has slowed down to single digit led by multiple factors such as elections, slowdown in capex spending by government, global uncertainties etc. The same is getting reflected in the equity markets. We are hopeful of double-digit earnings growth to come back from 3QFY26 onwards. Markets have become stock specific and bottom-up approach is working well at the current juncture. We continue to remain constructive on growth potential of Indian economy and as we speak, corporate balance sheet of Indian corporates is in good shape. To sum up, fundamental growth story of India is intact, and investors need to be patient and should invest in businesses with strong fundamentals backed back by robust growth potential. Q) SIPs crossed Rs27K – what does it talk about the retail investor behaviour change? A) Retail investors are the smartest investors on the street and are sticking to disciplined approach of investing in the stock market through SIP route. Despite of muted sentiments on the street since last 9-10 months, SIP flow continues to remain robust, which is testimony to the fact that retail investors are no more scared of market corrections and are aware of the facts that correction is part and parcel of equity market investing. They seem to have understood the benefits of long-term systematic investment approach. Thanks to the 'Mutual Fund Sahi Hai' campaign, larger investor base is able to take advantage of wealth creation journey in the market. Q) How is the corporate bond market shaping up here in India? A) As per RBI's Financial Stability Report, June 2025, corporate bond net outstanding rose to Rs 53.6 trillion as at end of Mar' 25 with the highest ever fresh issuance of Rs 9.9 trillion (up 28% YoY) during FY25. The rise in corporate bond issuance signals growing traction in India's corporate bond market. This also points to an uptick in private corporate capex. Kindly note, Indian corporates are sitting on healthy balance sheet and are tapping bond markets to tap capital for growth. As per data, institutional investors dominate the market with holding of more than 95% of the outstanding corporate bonds. Q) Where are the pockets of opportunities coming from A) We believe winners will emerge from following pockets (1) Auto OEMs and Auto Anc, (2) Cement, (3) NBFCs particularly with focus on MSME, Housing, Gold etc (4) Capital market play like wealth managers and AMCs, (5) Select Banks, (6) EMS, (7) Recycling, (8) New age businesses, (9) Pharma - CDMO, (10) Structural Steel Tubes, (11) Telecom Service Providers, (12) Hotels, (13) Hospitals, (14) Manufacturing (Aerospace Engineering, Railway Wagons, Power Equipment, Pharma ancillary etc), (15) Metals/Mining Q) Where is the smart money moving? A) We believe smart money is chasing stocks outside the benchmark indices which are likely to deliver healthy growth in medium to long term. The list of sectors shared above are likely to outperform in medium to long term. Q) How should one play the small & midcap space? A) Investors should be selective in investing in small and midcap space and should deploy fresh capital in companies backed by strong fundamentals. Investors should avoid narrative driven stocks.
