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ETMarkets Smart Talk: Next bullish phase for Indian markets likely after September 2025, says Samvitti Capital's Prabhakar Kudva

ETMarkets Smart Talk: Next bullish phase for Indian markets likely after September 2025, says Samvitti Capital's Prabhakar Kudva

Time of India5 days ago
In this edition of ETMarkets Smart Talk, S Prabhakar Kudva, Director and Principal Officer at Samvitti Capital, shares his outlook on Indian equities amid ongoing market consolidation.
Kudva believes the next major bullish phase for Indian markets is likely to begin after September 2025, following a period of digestion after two strong years of rally.
He highlights the role of
mid and small-cap stocks
in driving growth, the resilience of domestic liquidity, and potential
FII inflows
as global dynamics shift.
Kudva also discusses key sectors to watch and explains why he views the current phase as a stock picker's market. Edited Excerpts –
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Q) Markets are struggling in the first month of 2H2025. What is limiting the upside?
A) I think we need to take a step back and look at the big picture. We are coming off two very good years (Mar'23 to Sep'24) in the broader equity market.
What we are going through in 2025 is best described as a period of digestion or consolidation. In the interim, the markets have navigated elections, multiple wars, and most recently, the 'Trump tantrums'.
Against this backdrop, the markets are doing just okay. That said, there is no major reason for any immediate large upside as earnings growth has been good but is already well priced in.
Also, there is little fear of a large downside given the strong domestic liquidity and under-weight FII positioning.
Q) The June quarter season has just begun – how do you see India Inc. faring in this quarter? Which sectors should investors watch out for?
A) Typically, Q1 is a weaker quarter compared to Q4, so the first thing is we should avoid QoQ comparisons. Last year, Q1 was all about elections, followed by a low-growth Q2.
This year, I expect both Q1 and Q2—and maybe even Q3—to enjoy a low base effect and deliver reasonably good growth overall.
As has been the trend over the last few years, the action is likely to be in the mid and small-cap space, while large caps will provide more sedate returns overall.
Q) Everyone says it is a stock pickers' market now and the days of easy money are over. What are your views?
A) As mentioned earlier, we are now in a rangebound market after a bullish phase that lasted 18-24 months until Sep'24. This rangebound phase typically lasts around 12 months, so the next leg may start only after Sep'25 or so.
Of course, this is just conjecture based on historical patterns. In this environment, only a few sectors will do well. One needs to identify these outperforming sectors and allocate to quality stocks during corrective phases.
Q) SIP crossed ₹27,000 crore for the first time in June. What is boosting the momentum?
A) The SIP momentum picked up post-Covid and has been continuing ever since. I believe the new generation of investors understands that significant wealth creation is possible only in equity markets.
Many investors who started small in 2021 have done very well over the last four years and are consistently increasing their exposure.
This looks like a secular trend, and we should not be surprised if SIP flows continue to rise and the numbers become truly staggering over the next decade.
Q) FIIs are still not back in India completely. Are valuations or earnings acting as headwinds?
A) I think it's neither valuations nor growth. FIIs have been under-weight on India over the last few years primarily because they've been doing so well in their home countries, especially with the Mag7 and big tech companies performing exceedingly well.
There hasn't been a pressing reason for them to step out, particularly when most global markets struggled post-Covid. India, of course, has been an exception with strong growth.
However, in terms of allocations, we're still bucketed with other Emerging Markets, and overall allocations to this segment were probably reduced. Also, the US dollar has been very strong during this period.
It's only now, post-Trump, that the dollar weakness has begun, and as a result, emerging markets—including India—are starting to pick up.
If this trend continues, we can expect FII allocations to India and other EMs to increase materially, something we've started to see in recent months.
Q) Which sectors are likely to drive momentum in 2H2025?
A) My focus has always been on growth. I believe sectors like Pharma, Auto Components, Defence, Power, Data Centres, EPC, Value Retail, and Wealth Management are likely to perform well.
Q) Any sectors you think are overheated?
A) We've seen a reasonable correction across the board over the last six months, so a lot of froth has been cleared out. I wouldn't say valuations are cheap, but at the same time, they're not overheated either—broadly speaking.
Of course, on a stock-specific basis, there will always be pockets of over-valuation, but overall, I don't see much overheating at this point.
Q) Despite recent regulatory steps, retail investors still account for 91% of the losses in the derivatives segment. What more can SEBI do to protect them?
A) I believe the responsibility doesn't lie solely with SEBI but with the entire ecosystem. Investor education is crucial because, ultimately, if people are inclined to gamble, they'll find ways to do so outside of markets as well.
That said, I'm not in favour of over-regulation as long as there's no misconduct, because excessive regulations can also hurt genuine players. It's a delicate balance, and SEBI has been doing an exemplary job in keeping our markets clean. That focus should continue.
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In Bihar, a matter of life and debt
In Bihar, a matter of life and debt

The Hindu

time8 minutes ago

  • The Hindu

In Bihar, a matter of life and debt

Chandra Devi, 53, holds up a loan slip, its creases more prominent than its text. It states that she borrowed a loan of ₹35,000, allegedly from RBL Bank, a private sector institution, in May 2024. 'I have to repay the loan and an interest rate of do taka (2%),' Chandra declares. But the slip states that the interest rate is a hefty 25% over two years. Chandra is sitting in a mango orchard with a group of women at Dekuli Chatti village in Darbhanga district of Bihar. Around her, children climb trees under an overcast sky. Some of them clamber to the top, others hang upside down from branches. Their mothers sit on a yellow plastic sheet spread over the grass. While watching their children's antics, they share their struggles on repaying dues. According to the 2022 caste survey of Bihar, 34% of households in the State earn ₹6,000 or less per month. In June 2025, Piramal Enterprises, an Indian non-banking financial company (NBFC) focused on financial services, published a study. In it, they stated that the share of Indian households from economically weaker sections of society — that is, those earning ₹1-2 lakh a year — who borrowed from formal channels, such as banks and NBFCs, contracted by 4.2% between 2018-19 and 2022-23. At the same time, the share of households borrowing from informal or non-institutional sources of credit, such as money lenders, friends, families, and shopkeepers, grew by 5.8%. The data also shows that Bihar accounts for the highest share (18%) of households in India who borrow from non-institutional lenders. The study was based on data from the Centre for Monitoring Indian Economy, an independent private entity that serves as an economic think tank as well as a socioeconomic database. However, many households that borrow from non-institutional lenders also borrow from microfinance institutions, which are regulated by the Reserve Bank of India (RBI), the country's central bank. The RBI defines a microfinance loan as 'a collateral-free loan given to a household having an annual income up to ₹3,00,000'. According to Sa-Dhan, an RBI-approved self-regulatory body for the microfinance sector, there are 224 such institutions in India. While loans from microfinance institutions help impoverished borrowers across India, borrowers are often unable to repay them and fall behind. They also sometimes run away, fearing that microfinance companies will demand repayment using strong-arm tactics. As a result, many households remain trapped in a cycle of debt. When loans become nightmares Chandra belongs to the Musahar community. Musahars are among the 18 Scheduled Castes in Bihar who were recognised as Mahadalits by Chief Minister Nitish Kumar in 2007. They are socially and economically the most backward among Scheduled Castes. Chandra says she doesn't know the name of the bank from which she borrowed a loan; instead, she identifies it by its location — Donar, a locality in Darbhanga. 'I was asked to give my Aadhaar card, nothing else,' she says, about the process of securing the loan. The slip she holds says the loan was taken for 'agriculture-livestock/diary/poultry/cattle' purposes, but Chandra, the mother of two daughters and a son, says she borrowed it for her older daughter's wedding. Before the wedding, the groom's family demanded a motorcycle as part of dowry. Chandra borrowed money from the village mahajan (money lender). When that didn't suffice, she went to a women's self help group (SHG). Finally, she secured a loan, allegedly from RBL Bank. As Chandra's husband has been out of work for several months due to an illness, her family depends entirely on the amount her son sends home. 'He sells apples in Kolkata, so he cannot always send money.' she says. 'After all, everything is so expensive these days.' Chandra also worries that she has a teenage daughter who will 'soon be of marriageable age.' Punam Devi, 42, who is also from the Musahar community, keeps two documents close to her chest. One shows that she took a loan of ₹40,000, allegedly from Pyramid Finserve, an emerging NBFC, in July 2024. Punam borrowed the loan for her younger son, who had been diagnosed with meningitis. The other document shows that she borrowed another loan of ₹75,000, allegedly from Utkarsh Small Finance Bank Limited, a commercial bank focused on 'providing banking and financial services, particularly to underserved and unserved sections of the population, primarily in rural and semi-urban areas.' This loan, borrowed to pay for treatment of her husband who lost a leg in an accident, was cleared on March 23 this year with an interest rate of 28%, as per the document. Punam says she had to pay installments every fortnight. After her husband's accident, the family's income is now nearly negligible, making it all the more challenging for them to repay the loan. Both men were treated at private hospitals. 'We don't get admission in government hospitals,' she says. The other women nod along. Parvati Devi, 38, says her husband works in Bengaluru, Karnataka, as a daily wage labourer. He left 15 days ago and will return only next year. 'We had to borrow money for our eldest daughter's wedding,' says Parvati, who also belongs to the Musahar community. 'We borrowed nearly ₹1.5 lakh from the local money lender four years ago. Unable to repay the loan, I took three loans from three microfinance institutions.' Her total liability amounted to ₹1.35 lakh and she had to pay monthly installments of about ₹7,000. 'Agents never fail to turn up' Chandra, Punam, and Parvati sought loans for weddings or for treatments in hospitals and struggled to repay the amounts. Many of these women accessed microfinance institutions through group lending. In this process, borrowers form small groups and the members of the group are jointly liable for each other's loans. Banks appoint agents to recover overdue loan payments or outstanding debts. The women say recovery agents never fail to turn up, and the amount of money their families have is usually never enough to meet the final sum. This week, a recovery agent stood at Parvati's door, threatening and abusing her the entire day. 'I was not scared,' Parvati says. 'I shouted at him as well. He said he would file a case against me. I told him, so be it.' The recovery agent left only after she managed to put together the amount, which fell short of ₹1,000, she says. Mina Devi is due to pay her monthly instalment of ₹2,450, but she is ₹50 short. 'He [the recovery agent] won't take the amount until I give him the full amount,' she complains. Mina worries about his response. 'Last time he told me, 'Why don't you go to the road and beg? And in the process if you die, the loan will be waived off.'' According to the RBI, when a borrower dies and there is no collateral, the lender can recover the amount from the legal heirs, and only up to the limit of what the heirs inherit. Mina's husband spends at least six months working in the fields in Punjab, so she has to deal with the agents on her own. 'When a male member of the family is not around, the agent hangs around for hours,' she says. Rekha Devi has three separate loans to repay, with the total liability amounting to close to ₹1 lakh. 'He [recovery agent] asked me why I don't sell my body if I have no money to pay the instalment,' she says. The women say the agents often threaten to take away possessions they have painstakingly collected over the years — beds, pressure cookers, gas cylinders, even the odd plastic chair. In Somini Devi's case, this became a reality. Somini's husband is no more. She has six children — three daughters and three sons — and all of them are married. She says she has been left alone to repay the loans she borrowed for their weddings and for other expenses. 'The recovery agent took away everything I had — a table, a chair, my bed, the cooker, the gas cylinder, and even my supply of wheat for the year. He stripped my house empty.' When asked if she reported the incident to the police, she stares blankly. 'How can we?' she murmurs. The women say at least 20-25 families in their village alone have fled fearing recovery agents. As they start counting and naming the families, many of them turn towards Pawan Devi. Pawan took loans from five microfinance institutions for her son's wedding, but she has been unable to repay the amount. Pawan and her family fled the village, spent more than a year in Punjab, and returned only last week. Pawan cannot recall the name of the village where she and her family stayed. 'Barring the biting cold, it was better there,' she says. 'The landlord didn't charge us for electricity or water. There were clean toilets. And we had a regular income working in the fields.' Pawan says what she cherished the most about her stay in Punjab was the absence of recovery agents. But the agents she dreads are now back at her doorstep. 'They come every other day. Sometimes they stand outside for hours. Sometimes they enter the house and start rifling through our papers. The other day, they took away my son's Aadhaar card,' she says. Around 30 kilometres away at Navtol village in Bhawanipur panchayat of Darbhanga district, Mahesh Kumar Roy, who says he is a recovery agent with Muthoot FinCorp, is on his daily rounds of the village. Mahesh, who hails from Darbhanga, goes from house to house on his motorcycle. He pulls out the sheaves of papers rolled up between his motorcycle handles and runs his finger along the names. 'Since 2022, when I joined the company, I have been given 1,100 households to track. At least 450 families who defaulted on their loans have disappeared. I make regular rounds, but all I see is locked homes,' he says. Mahesh adds that people 'disappear only after they have paid 15-16 installments' and 'after we have managed to recover at least 60% of the principal amount.' Mahesh prides himself as a 'decent' agent. Aware of the reputation that recovery agents have, he looks at the crowd gathered around him and asks them whether he is intimidating or threatening. They all say 'no'. Rules on paper The RBI issued exhaustive guidelines in 2022 collating the piecemeal directives it had issued earlier. It said that the lenders must 'provide the flexibility of repayment periodicity on microfinance loans as per borrowers' requirement'. That is, the repayment period of the loan must be moulded to the requirements of the borrowers, rather than the needs of the lender. To ensure that microfinance loans do not unduly burden the borrowers, the RBI directions also include a provision that says each regulated lender must ensure that the monthly repayment burden of a household should not exceed 50% of the monthly income of that household. RBI also has a separate set of guidelines for recovery agents. It defined what would be deemed as harsh methods, such as use of threatening or abusive language, persistently calling the borrower and/or calling the borrower before 9:00 a.m. and after 6:00 p.m., harassing relatives, friends, or co-workers of the borrower, publishing the name of borrowers, the use or threat of use of violence or other similar means to harm the borrower or borrower's family/assets/reputation, or misleading the borrower about the extent of the debt or the consequences of non-repayment. However, the regulations on the interest to be charged on these loans simply say that the interest rates and other charges and fees on microfinance loans 'should not be usurious', and that the RBI would scrutinise this aspect of the loans. Andhra Pradesh, Telangana and Assam have specific regulations for microfinance. Several other States such as Kerala, Gujarat, Tamil Nadu, Karnataka, Maharashtra, and Madhya Pradesh have laws regulating money lenders, which also include microfinance institutions. Assembly elections are scheduled in Bihar in October, but there is no political thrust in the State on bringing in any regulatory mechanism in this regard. Jayati Ghosh, Professor of Economics at the University of Massachusetts Amherst, U.S., says it is not surprising that the RBI guidelines for microfinance institutions are not being implemented since there is often a lack of implementation of State policy. She also says there are fundamental flaws in the microfinancing model. 'While it makes credit accessible for the poor, there is high interest and lack of monitoring of how repayment is ensured, which allows for threats, intimidation, and pressure to take on multiple loans,' she says. 'In many places, linkages with banks through the SBL (SHG-Bank Linkage Scheme) have been provided, but these also provide limited funds. Only in States where these SHGs are effectively co-operatives that create income-generating opportunities (such as Kerala's Kudumbashree) has this been more successful.'

Mutual recognition pacts between India, UK may be ready in 36 months
Mutual recognition pacts between India, UK may be ready in 36 months

Time of India

time22 minutes ago

  • Time of India

Mutual recognition pacts between India, UK may be ready in 36 months

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ITC lines up Rs 20,000 crore capex, aims to improve FMCG margins
ITC lines up Rs 20,000 crore capex, aims to improve FMCG margins

Time of India

time24 minutes ago

  • Time of India

ITC lines up Rs 20,000 crore capex, aims to improve FMCG margins

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