
Markets poised for stability as earnings downgrades ease: Dikshit Mittal
"And in terms of consumption, companies who are into catering to upper middle class or affluent part of the Indian consumers, those companies should do well and partially, selectively on the domestic pharma that we are bullish," says
Dikshit Mittal
,
LIC Mutual Fund
.
Let me start by asking you, what are you making of the
market
setup currently? The benchmark indexes are holding up, an uptick of 1% there. So, what are you making of the markets trend right now?
Dikshit Mittal:
Yes, so markets have been in a range for the last 9-10 months and during that time period we have tried to discount many global events, global uncertainties, as well as domestic front also some
earnings downgrades
happened in the last three quarters.
So, to that extent, markets have been trying to digest all these things and going forward on a brighter note Q4 season has been better than expectations, so at the start of the season everyone was expecting that earning downgrade cycle will continue but thankfully, there has not been many downgrades in this season, so that gives us hope that going forward the earning downgrade are basically a thing of the past, so that should make the market much more reasonable going into next year.
And on the valuation side, looking at the kind of valuation the bonds are trading at, because bond yields are continuously falling and at the same time after this consolidation phase and also the ample liquidity that we have in the market, so that gives us hope that at least downside is capped at these levels and upside will depend on the earning trajectory that we see going into next year.
Live Events
Give us some sense that sectorally where are you finding margin of safety at this point in time though the markets, you are sensing them to be a bit of rangebound, but sectorally where are your biases?
Dikshit Mittal:
Sectorally, we bullish on industrials and capital good sector and within that also the sectors or companies which are more exposed to the power generation, transmission and distribution sector, at the same time companies who are into manufacturing and doing some kind of import replacement or electronic manufacturing, these are sectors that we are betting on. And in terms of consumption, companies who are into catering to upper middle class or affluent part of the Indian consumers, those companies should do well and partially, selectively on the domestic pharma that we are bullish.
You just spoke about your preference for financials and industrials and that also dominates your portfolios as we see. But what is your outlook on these for the rest of FY26 given you were just talking about how Q4 performance has been better than expectations? Are you looking to make any changes or any new sectors that you are looking to add to your portfolios?
Dikshit Mittal:
Yes, so coming to financials, we have been very selective. So, in the recent results we have seen many banks or many NBFCs have seen some pressure on the NIMs and that can continue going into next two quarters also because we are into the rate cut cycle, so they are basically liability test to get priced in earlier than their assets. So, we are quite selective in the financials, but private financials as well as the NBFCs which are into secured lending space they should do relatively well next year.
And industrials as I mentioned, we are bullish selectively industrials, one is some of the companies who are export oriented, who are well entrenched to the global supply chains as well as companies who are catering to power generation capex as well as the transmission and distribution capex, so there we are bullish.
And incrementally, we are looking to find some opportunities, companies who are into manufacturing space, electronic manufacturing, or some of the contract manufacturing space. So, these are the few sectors which we believe can do well over longer term and we are looking to find some of the opportunities in these sectors.
You just spoke about the domestic pharma companies. Within that, are you biased with the
CDMO
plays because of late, though the generic companies have delivered an okay set and there is uncertainty that still prevails with respect to the US outlook, but CDMO companies have done very well, but the other fact is that they have been trading a little higher. Given the growth outlook, the higher valuations are they justified?
Dikshit Mittal:
Yes, so we are more inclined towards the CDMO companies than the generic companies because generics there is lot of pricing issues as well as some regulatory issues also in the US. So, in the CDMO space,
I agree that valuations are slightly more expensive, but there is large opportunity ahead of these companies because India's market share globally in terms of contract manufacturing for the patented molecule manufacturing is very-very low. So, India has been trying to gain some of the supply chain shifts which are happening globally.
So, to that extent market is trying to discount that, the kind of scalability these companies have over the next 5 to 10 years. So, we are on the lookout for these kinds of opportunities and companies who already have strong relations with the global innovators, who already are doing some kind of work with them and there is high probability that incrementally more business can come to these companies over next two to three years as a supply chain get realigned. So to that extent on structural basis we are positive on this space on the CDMO.
And on domestic space, obviously, companies who are not supplying to the US but catering to the domestic consumer, those companies have much more stable earnings profile, much more stable growth profile, and margin profile is also quite strong. So, to that extent these are the two sectors in the pharma that we are bullish on.
Just before this you also mentioned that you see long-term scope in the power space, so in that particular segment within that space I want to talk to you about the clean energy space, just want to take your view over there, especially what kind of impact do you see from the new US tax bill that just came last night, so what is the impact that you see from that one, some of the shares have been seeing quite a downtrend in trade today.
Dikshit Mittal:
So, on clean energy side, one has to be very-very selective. The companies who have some kind of edge either in terms of technology or cost, those segments should be looked into. But the companies who are solely dependent on tax arbitrage or maybe subsidy arbitrage, those companies will remain risky to invest into from a longer-term period. So, we will be more inclined towards the companies who are supplying components in this renewable space or the companies who are users or maybe who are the beneficiaries of this trend rather than investing to companies who are some sort of competing globally with Chinese or other countries where overnight things can change in terms of cost structure or tax structure, I think we will be more inclined towards the companies who are not dependent on these kind of tax arbitrage.
We did talk about some of the sectors that you are bullish on, but which sectors you are not comfortable with at this point in time, where you would like to advise our investors to stay away from some time now?
Dikshit Mittal:
So, at this point in time considering the global growth uncertainty, so we are not so much sure of the global cyclical. So, the companies who are exposed to the global economic activity and they are into commodity cycles kind of things, so we will be avoiding those space and we will be more inclined towards domestic focused companies or even export oriented companies who have some edge in terms of technology or cost advantage and all these things, but global cyclical we will avoid at this point in time.

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


India.com
37 minutes ago
- India.com
Ahmedabad Air India Plane Crash: Tata Group Announces Rs 1 Crore Compensation For Victims' Families
Ahmedabad Air India Plane Crash: Tata Group will offer Rs 1 crore in financial assistance to the families of each individual who lost their life in this tragic incident, according to the company's chairman, N. Chandrasekaran, on Thursday. The company will also cover the medical expenses of those injured, ensuring they receive the necessary treatment and support. Moreover, the Tata Group will provide support for the construction of B J Medical College's hostel. Tata Sons chairman N. Chandrasekaran further said, "No words can adequately express the grief we feel at this moment. Our thoughts and prayers are with the families who have lost their loved ones, and with those who have been injured". We are deeply anguished by the tragic event involving Air India Flight 171. No words can adequately express the grief we feel at this moment. Our thoughts and prayers are with the families who have lost their loved ones, and with those who have been injured. Tata Group will… — Tata Group (@TataCompanies) June 12, 2025 In a tragic incident, an Air India Boeing 787-8 Dreamliner aircraft crashed in Ahmedabad's Meghani Nagar area on Thursday afternoon, prompting a massive emergency response. According to a statement shared by Air India on X (formerly Twitter), the flight had departed from Ahmedabad at 13:38 hrs with 242 passengers and crew members on board. Among the total passengers were 169 Indian nationals, 53 British nationals, 7 Portuguese nationals, and 1 Canadian national. A dedicated passenger helpline has been activated at 1800 5691 444 for more information. The Boeing 787-8 Dreamliner, widely used for long-haul international flights and considered a modern and efficient aircraft, has had a history of safety concerns. According to information, the DGCA officials are on site collecting flight data, voice recordings, and witness accounts as part of the investigation. Sources said that Boeing representatives and officials are also expected to assist the ground staff. This is one of the most serious aviation incidents in India in recent years involving a wide-body aircraft. Boeing aircraft have been involved in multiple crashes over the years. The most recent was a Jeju Air flight in South Korea, which crashed in late December 2024 during a landing attempt, resulting in the loss of 179 lives. That aircraft was a Boeing 737-800.


The Hindu
37 minutes ago
- The Hindu
Indian stocks down 1% as U.S. says Israel may attack Iran
Indian stocks dipped 1% on Thursday (June 12, 2025) after United States withdrew diplomats from the West Asian nations saying that Iran was 'not safe' and may be attacked by Israel. Benchmark Nifty 50 and Sensex fell 1% to 24,888,20 points and 81692 points on Thursday. All sectoral indices dipped with Financial services indices falling nearly 2%. With Thursday's slump Indian markets broke a consecutive six day positive returns. 'The downturn was attributed to intensified profit-booking and risk-off sentiment, as escalating geopolitical tensions in the Middle East overshadowed positive macro cues such as softening inflation and encouraging trade data,' said analysts at Bajaj Broking. The slump in equity markets also led to a nine paise depreciation of rupee settled down to ₹85.09 a dollar. 'The Indian rupee becomes the worst-performing Asian currency, battered by risk-averse sentiments and a surge in crude oil prices driven by geopolitical concerns. Weak domestic equities have further weighed on the local currency,' said Dilip Parmar Senior Analyst at HDFC Securities.


Time of India
38 minutes ago
- Time of India
Ahmedabad plane crash: Air India announces relief flights from Delhi & Mumbai
Following Thursday's Air India crash near Ahmedabad involving 242 people, the airline arranged special relief flights from Delhi and Mumbai for passengers' families. The Boeing 787, bound for London, crashed into a medical college facility. Tata Group pledged ₹1 crore compensation per victim's family and support for the injured. PM Modi called the incident 'heartbreaking beyond words.' Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads After the Air India plane crash near Ahmedabad airport on Thursday with 242 people onboard, the airline announced it is arranging two relief flights, one each from Delhi and Mumbai, to Ahmedabad for the next of kin of passengers and Air India staff. The plane, which took off at 1:38 p.m. and was bound for London Gatwick Airport, crashed into a dining facility at a local medical and photos of the crash site showed plumes of black smoke coming from the wreckage and firefighters dousing charred residential buildings. The plane's tail appeared to be hanging out of a damaged of departure: 2300 hrs on 12 JuneTime of departure: 0110 hrs on 13 JuneTime of departure: 2300 hrs on 12 JuneTime of departure: 0115 hrs on 13 JuneNext of kin of passengers and staff in Delhi and Mumbai wanting to travel on these flights can call our hotline on 1800 5691 444. Additionally, those coming in from international destinations and wanting to travel can call our hotline on +91 Tata Group will provide Rs 1 crore to the family of each person who lost their life in Thursday's Group will also cover the medical expenses of those injured and ensure that they receive all necessary care and support, he said. Additionally, "we will provide support in the building up of the B J Medical's hostel."Air India said the plane, a Boeing 787-8 Dreamliner, was carrying 169 Indian citizens, 53 British, seven Portuguese and one Canadian. Injured people were being taken to hospitals, the airline said, but it was unclear whether they had been on the ground or on the plane departed from Sardar Vallabhbhai Patel International Airport, which temporarily shut down after the crash. It had been scheduled to land in London at 6:25 p.m., London Gatwick Airport Minister Narendra Modi said the crash was "heartbreaking beyond words" in a statement on social media. "In this sad hour," he added, "my thoughts are with everyone affected by it."