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Economic Times
6 days ago
- Business
- Economic Times
Fixed Income is portfolio's seatbelt against volatility: Chakri Lokapriya of LGT Wealth India
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel In this edition of ETMarkets Smart Talk, Chakri Lokapriya, CIO – Equities at LGT Wealth India , explains why fixed income should be viewed as a critical stabilizer in any investment portfolio Comparing it to a 'seatbelt' that quietly cushions against market volatility, Lokapriya highlights the importance of allocating 20–30% of portfolios to high-quality bonds , especially in today's uncertain global believes fixed income is not just about safety but about steady compounding and risk management, making it a foundational element in long-term wealth creation. Edited Excerpts –A) The scene is the place for a lovely outcome of markets moving higher, and closing CY2025 with a 10% to 12% gain. However, the big elephant in the room is US Tariffs India is expected to conclude the talks by the end of July 2025. And it is evident that India would not budge on allowing access to US agricultural or dairy products, as it is detrimental to the livelihood of 60% of India's farmers.A tariff deal without the above two items is the big event to watch for and markets would take a decisive directional move based on the outcome of the U.S. Tariff deal with India.A) We are running well diversified portfolios with good earnings we are taking a balanced approach in rebalancing portfolios to volatile decisions such as raising and lowering tariffs.A) 2020 was a watershed moment for India's corporate in managing cash flows and maintaining sufficient liquidity to counter uncertain 2020, many Indian companies have balanced capital expenditure versus profit growth admirably a number of Sunrise sectors, old-world in many respects such as Defence, Railways, Semiconductors are structurally allowing Corporate India's profits to growth faster than the GDPA) In Electronics and Semiconductors: growth is Fuelled by import substitution ,PLI. US and Europe shifting sourcing from China to is the leader in Electronics System Design and Manufacturing (ESDM), (40% of output and 30% of exports). India stands at 2% therefore huge room to rising share of electronic content across automobiles, CD, Industrial translates into a higher addressable market for EMS. India semiconductor market size to surpass $55 bn by electronics market is at $150 bn, to grow to $500 bn and create 6mn jobs by 2030. PM Modi's goal 100% of electronic manufacturing in India.A) In an uncertain world, fixed income is your portfolio's seatbelt—quiet, steady, and critical when volatility hits. Allocating 20–30% of your portfolio to bonds can help cushion equity swings and deliver a reliable environment of moderating rates and strong credit spreads makes this a smart time to lock into high-quality instruments, such as government bonds, AAA corporates, and select high-yield of it as earning while you wait—letting your capital work quietly in the background. The goal isn't just safety—it's smart, steady compounding through cycles. In a well-built portfolio, fixed income isn't optional—it's foundational.A) Energy as a sector will be in the spotlight in 2H2025. India with 1.4 billion population, urbanization, 22 GW by 2032, net-zero by 2070. Retrofitting coal-fired plants for efficiency and nuclear energy, targets of 500 GW by 2030 (50% non-fossil fuel electricity), with PLI, waived transmission charges, National Solar Mission, Hydro and Wind. Nuclear power generation target of 100 GW by managing solar and wind energy, Battery energy storage systems (BESS) demand to reach 60 GW by 2030. India's abundance in thorium, uranium, solar, and wind reduce import dependency.A) Yes Indeed, India was and is a stock pickers market with over 6,000 companies to select from. We aim to look for stocks that have strong earnings visibility due to an acceleration of business, recovering balance sheets.A) Past two years have had multiple war-like situations and the US too joined the the tariff has left countries finding ways to control inflation. Against this backdrop, Gold continues to be a hedge against inflation and an investment vehicle.A) The cumulative 100bps rate cut significantly reduces borrowing and working capital costs, especially for capital-intensive sectors like power utilities (thermal/renewable) and spending is poised to benefit ahead of the upcoming budget, potentially accelerating revenue growth by 12–18%. The mid cap sector is expected to grow at 17% to 20% outpacing 8% to 10% growth of the large cap.A) Telecom as a sector has huge levels of debt, and regulatory and court interventions and therefore remain cautious.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
Time of India
6 days ago
- Business
- Time of India
Fixed Income is portfolio's seatbelt against volatility: Chakri Lokapriya of LGT Wealth India
In this edition of ETMarkets Smart Talk, Chakri Lokapriya, CIO – Equities at LGT Wealth India , explains why fixed income should be viewed as a critical stabilizer in any investment portfolio . Comparing it to a 'seatbelt' that quietly cushions against market volatility, Lokapriya highlights the importance of allocating 20–30% of portfolios to high-quality bonds , especially in today's uncertain global environment. He believes fixed income is not just about safety but about steady compounding and risk management, making it a foundational element in long-term wealth creation. Edited Excerpts – Q) Nifty closed with marginal gains in June, but for the first six months of 2025, it is up over 7%. How do you see markets for the rest of FY26? Any big events to watch out for? A) The scene is the place for a lovely outcome of markets moving higher, and closing CY2025 with a 10% to 12% gain. However, the big elephant in the room is US Tariffs . 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And it is evident that India would not budge on allowing access to US agricultural or dairy products, as it is detrimental to the livelihood of 60% of India's farmers. Bonds Corner Powered By India bonds seen steady ahead of RBI's debt sale, liquidity moves Indian government bond yields are anticipated to remain stable as traders await the weekly debt auction. The central bank's substantial liquidity withdrawal operation is fostering investor caution. Rate cut bets have increased following a drop in retail inflation, while shorter duration overnight index swap rates are expected to experience paying pressure due to the RBI's cash withdrawal. Why did RBI accept 79% of buyback bids despite high demand? Japan bonds tread water as wary investors await weekend election ETMarkets Smart Talk | Fixed Income is portfolio's seatbelt against volatility: Chakri Lokapriya of LGT Wealth India RBI plans bond switch to ease redemption load Browse all Bonds News with A tariff deal without the above two items is the big event to watch for and markets would take a decisive directional move based on the outcome of the U.S. Tariff deal with India. Q) How are you managing the volatility in your portfolio? Any key learnings which you would like to share from 1H2025? Live Events A) We are running well diversified portfolios with good earnings visibility. Furthermore, we are taking a balanced approach in rebalancing portfolios to volatile decisions such as raising and lowering tariffs. Q) One of the reports suggested that India Inc.'s profits have grown nearly 3x faster than GDP since FY20. What structural factors are driving this divergence? A) 2020 was a watershed moment for India's corporate in managing cash flows and maintaining sufficient liquidity to counter uncertain periods. Since 2020, many Indian companies have balanced capital expenditure versus profit growth admirably well. Moreover, a number of Sunrise sectors, old-world in many respects such as Defence, Railways, Semiconductors are structurally allowing Corporate India's profits to growth faster than the GDP Q) With the China+1 theme gaining traction, which Indian sectors are best placed to attract global capital and scale? A) In Electronics and Semiconductors: growth is Fuelled by import substitution ,PLI. US and Europe shifting sourcing from China to India. China is the leader in Electronics System Design and Manufacturing (ESDM), (40% of output and 30% of exports). India stands at 2% therefore huge room to grow. The rising share of electronic content across automobiles, CD, Industrial translates into a higher addressable market for EMS. India semiconductor market size to surpass $55 bn by 2026. India's electronics market is at $150 bn, to grow to $500 bn and create 6mn jobs by 2030. PM Modi's goal 100% of electronic manufacturing in India. Q) How is fixed income as an asset class looking for long-term investment? How much money should one allocate as a hedge to combat volatility? A) In an uncertain world, fixed income is your portfolio's seatbelt—quiet, steady, and critical when volatility hits. Allocating 20–30% of your portfolio to bonds can help cushion equity swings and deliver a reliable income. Today's environment of moderating rates and strong credit spreads makes this a smart time to lock into high-quality instruments, such as government bonds, AAA corporates, and select high-yield credits. Think of it as earning while you wait—letting your capital work quietly in the background. The goal isn't just safety—it's smart, steady compounding through cycles. In a well-built portfolio, fixed income isn't optional—it's foundational. Q) Which sectors are likely to remain in the spotlight in 2H2025? A) Energy as a sector will be in the spotlight in 2H2025. India with 1.4 billion population, urbanization, 22 GW by 2032, net-zero by 2070. Retrofitting coal-fired plants for efficiency and nuclear hubs. Renewable energy, targets of 500 GW by 2030 (50% non-fossil fuel electricity), with PLI, waived transmission charges, National Solar Mission, Hydro and Wind. Nuclear power generation target of 100 GW by 2047. For managing solar and wind energy, Battery energy storage systems (BESS) demand to reach 60 GW by 2030. India's abundance in thorium, uranium, solar, and wind reduce import dependency. Q) Can we say that we are in a "stock picker's market" ahead? If yes, what are the key traits investors should look for in FY26 picks? A) Yes Indeed, India was and is a stock pickers market with over 6,000 companies to select from. We aim to look for stocks that have strong earnings visibility due to an acceleration of business, recovering balance sheets. Q) Gold has also seen a tremendous run in 2025 – how do you see the yellow metal shining in 2H2025? Time to book profits or add on dips? A) Past two years have had multiple war-like situations and the US too joined the conflict. And the tariff has left countries finding ways to control inflation. Against this backdrop, Gold continues to be a hedge against inflation and an investment vehicle. Q) How should one play the small & midcap theme? Has the profitability improved compared to large caps? What does the data suggest? A) The cumulative 100bps rate cut significantly reduces borrowing and working capital costs, especially for capital-intensive sectors like power utilities (thermal/renewable) and mining. Infrastructure spending is poised to benefit ahead of the upcoming budget, potentially accelerating revenue growth by 12–18%. The mid cap sector is expected to grow at 17% to 20% outpacing 8% to 10% growth of the large cap. Q) Any sector that is running out of steam and investors should carefully pare their positions? A) Telecom as a sector has huge levels of debt, and regulatory and court interventions and therefore remain cautious. ETMarkets WhatsApp channel )
Mint
24-06-2025
- Business
- Mint
Iran-Israel war priced in; Nifty 50 to hit 27,500-28,000 by year-end: Chakri Lokapriya, LGT India
Expert view: Voicing his bullishness on the Indian stock market despite rising geopolitical risks, which he believes are largely priced in, Chakri Lokapriya, CIO, Equities, LGT India, predicts another 10-12% upside in the Nifty 50 over the next six months. Ahead of the earnings season, the veteran market expert sounds bullish on the real estate and banking sectors. The CIO has also shared his top stock to buy ideas for solid returns over the next year. Despite rising geopolitical tensions, particularly the Iran-Israel conflict, markets have shown surprising resilience. Much of the potential downside has already been priced in, allowing equity indices to hold ground amid volatility. June has seen crude oil prices spike 17% in response to fears of regional escalation and due to U.S. involvement. However, oil remains down 11% over the past year, and year-to-date prices are largely flat. This stability implies no significant changes to India's oil import outlook or economic growth projections. We credit the RBI's swift and steady policy actions to enable the market's ability to absorb such developments. We expect the Nifty 50 to reach 27,500 to 28,000 by the end of 2025—an upside of around 10% to 12% from current levels. The bullish view is underpinned by expectations of an earnings recovery over the next couple of quarters, following what we believe to be a bottoming out in Corporate India's performance. The key risks to this outlook include a further escalation in Middle East tensions and prolonged trade uncertainty with the U.S., both of which could act as headwinds. With the market trading at approximately 21 times one-year forward earnings, valuations appear reasonable. We see this as an opportune time for investors to consider entering or adding to their equity positions, especially with an 18-month investment horizon. Defence has emerged as a standout sector this quarter, buoyed by a string of global and regional conflicts that have reshaped geopolitical priorities. From the Russia-Ukraine war to the Israel-Iran flare-up, defence spending is on the rise globally. European nations are pledging up to 5% of GDP toward defence, while India is doubling down on indigenous manufacturing under its 'Make in India' and 'Atmanirbhar Bharat' initiatives. We believe several key players in India's defence ecosystem, such as Bharat Electronics Ltd (BEL), Hindustan Aeronautics Ltd (HAL), Bharat Earth Movers Ltd (BEML) are long-term beneficiaries of both domestic procurement and export opportunities. With the first-quarter earnings season approaching, market watchers are bracing for a mixed bag. The RBI's recent 50-basis-point rate cut—larger than market expectations—is expected to compress bank margins in the near term. However, the move could drive loan growth and benefit lenders with strong retail books. Winners: Real Estate (boosted by lower home loan rates), Banks (due to higher loan volumes) Laggards: Consumer Staples with low pricing power. We believe that select infrastructure and railway stocks as strong medium-term plays: REC Ltd and Power Finance Corporation (PFC): These infrastructure financiers stand to benefit from relaxed RBI provisioning norms, including reduced standard asset provisions and income recognition on an accrual basis for deferred projects. Titagarh Rail Systems: Seen as a long-term growth story, this railway manufacturer is expected to capitalise on robust government capex and secular growth in domestic rail infrastructure. Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Economic Times
05-06-2025
- Business
- Economic Times
M&M emerges as top auto pick with EV and SUV momentum: Chakri Lokapriya
India is adding a phenomenal amount of capacity equal to the entire what the EU power bill in a year, India is adding that over the next five years. Synopsis India's solar sector is experiencing a surge, driven by decreasing panel prices, prompting industries like Maruti to adopt solar power, reducing long-term costs. Despite potential export revenue margin pressures and reduced government subsidies post-Trump era, India is significantly expanding its solar capacity. Among automakers, M&M presents a strong investment opportunity due to its diverse product range and upcoming EV models. "The export revenue is likely will face some amount of margin. Now that aside, in terms of just moving the panel prices and other related component prices have come down and are coming down very fast and therefore, it is good for many industries to move part of theirs, like Maruti is moving part of the requirement to solar from the traditional thermal, it reduces their overall bill over a longer period of time," says Chakri Lokapriya, CIO-Equities, LGT Wealth. ADVERTISEMENT Just before Prakash was speaking to us about this monsoon session, we were talking about Maruti and their investment in their solar capacity. Give us a sense of where you are seeing India's solar space headed given there is so much buzz around it right now, on one side you have supply chain constraints coming in, on the other you have manufacturing PLI schemes that are looking to boost this sector as well. So, what is your visibility on this sector and where do you think we are headed? Chakri Lokapriya: There are two or three things happening. One is, of course, while solar is clearly renewable energy, is a trend which is happening worldwide, after Trump that has slowed down because the number of subsidies have been removed. And therefore, the growth while organic or rather through acquisitions either way, but the government subsidies are likely to come down. In other words, the export revenue is likely will face some amount of margin. Now that aside, in terms of just moving the panel prices and other related component prices have come down and are coming down very fast and therefore, it is good for many industries to move part of theirs, like Maruti is moving part of the requirement to solar from the traditional thermal, it reduces their overall bill over a longer period of time. Third, finally, India is adding a phenomenal amount of capacity equal to the entire what the EU power bill in a year, India is adding that over the next five years. Within the entire passenger vehicle space while, of course, M&M has been the leader, but that is a combination of not just PVs, but the SUV play and the farm equipment contribution as well to its overall pie, but if you had to put fresh money to work within the entire auto pack what would you do? Chakri Lokapriya: In the four-wheeler space it is M&M, has greater legs to the whole upside. They have a couple of EVs coming out. They have their, of course, SUVs which are doing well and their IC engines continue to chug along and M&M always is a sum of part story, but the upside valuation-wise is stronger given that they have a wider range of products. (You can now subscribe to our ETMarkets WhatsApp channel) Nikita Papers IPO opens on May 27, price band set at Rs 95-104 per share Nikita Papers IPO opens on May 27, price band set at Rs 95-104 per share Why gold prices could surpass $4,000: JP Morgan's bullish outlook explained Why gold prices could surpass $4,000: JP Morgan's bullish outlook explained Cyient shares fall over 9% after Q4 profit declines, core business underperforms Cyient shares fall over 9% after Q4 profit declines, core business underperforms L&T Technology Services shares slide 7% after Q4 profit dips L&T Technology Services shares slide 7% after Q4 profit dips Trump-Powell standoff puts U.S. Rate policy in crosshairs: Who will blink first? Trump-Powell standoff puts U.S. Rate policy in crosshairs: Who will blink first? SEBI warns of securities market frauds via YouTube, Facebook, X and more SEBI warns of securities market frauds via YouTube, Facebook, X and more API Trading for All: Pi42 CTO Satish Mishra on How Pi42 is Empowering Retail Traders API Trading for All: Pi42 CTO Satish Mishra on How Pi42 is Empowering Retail Traders Security, transparency, and innovation: What sets Pi42 apart in crypto trading Security, transparency, and innovation: What sets Pi42 apart in crypto trading Bitcoin, Ethereum, or Altcoins? How investors are structuring their crypto portfolios, Avinash Shekhar explains Bitcoin, Ethereum, or Altcoins? How investors are structuring their crypto portfolios, Avinash Shekhar explains The rise of Crypto Futures in India: Leverage, tax efficiency, and market maturity, Avinash Shekhar of Pi42 explains NEXT STORY
Time of India
22-05-2025
- Business
- Time of India
PSU banks, select private lenders remain attractive despite global market jitters: Chakri Lokapriya
"All this will take away the focus of the company from its core lending and borrowing business and instead focus on fixing the house. So, growth and operations is a casualty," says Chakri Lokapriya , CIO-Equities, LGT Wealth. What do you make of the market set up right now? Chakri Lokapriya: Clearly, with the US fiscal deficits turning out to be higher, it is now almost like there will be some form of tariff impact on all the other countries, India included. Against this backdrop where we have an RBI surplus which is going to be released sometime in the next few weeks, that can help India to do defence spending, capex spending, so that will support earnings, India corporate earnings, so that is the next support to watch for and, of course, the RBI rate cut. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Play War Thunder now for free War Thunder Play Now So, how important is the spike in bond yields and what kind of impact do you think that could have? Chakri Lokapriya: The impact of that is clearly a bit unnerving at one point. So, the only thing that will help in as far as India is concerned is we should see evidence of an earnings acceleration, because so far we have seen only earnings downgrade, only then it will justify the valuations going forward. Let us analyse some numbers and InterGlobe Aviation , it is, of course, a strong forecast for FY26, the management believes that all those geopolitical turbulences could very well be behind them. What is it that you anticipate in terms of where the stock could actually move from here and do you sense further upside? Chakri Lokapriya: InterGlobe clearly in the short to medium term is well positioned. It has a few things going in its favour which is oil is down and that is the biggest component of its raw material costs, fuel cost, and outside of that traffic growth continues to remain strong. Live Events And now in the traffic, in the peak season that we are going into which they do not have presence, that is the international segment, they are launching a new segment that may add some incremental bit, but not really, but just the domestic factor setup in itself the outlook for InterGlobe is good. In any case, I am sure everyone must have already exited IndusInd Bank , but what is it that you are making of the commentary because it is not just about core profitability or that one-time adjustment of forex, but there are many one-offs which I guess have led to this massive loss that they have incurred. Chakri Lokapriya: You are absolutely right. In this environment when a new CEO is going to come, it is going to impact a lot of changes, operational changes, operational uncertainty within the bank on top of their existing problems of asset quality, provisioning, accounting issues. So, it is best avoided and not touch for quite some time until things settle down. What is your view on IndusInd Bank, I mean, it just everybody knows the bad news. We know that there is a derivative laws. We know that there is a problem in MFI. And we know that there is no CEO. I mean, are markets pricing all the bad news? Chakri Lokapriya: I do not think so, simply because while the market might be pricing in news, what is still uncertain is about how will whoever is the new CEO, interim, how the operations are going to be run? How is it going to be cleaned up? All this will take away the focus of the company from its core lending and borrowing business and instead focus on fixing the house. So, growth and operations is a casualty. I was just looking at the charts of BEL and the stock is pretty much around its 52-week highs. We have seen a renewed vigour within the entire defence pack as soon as the geopolitical tensions with the neighbour actually sprung up. Wanted you to tell me that other than BEL, where is it that there is valuation comfort within purely the defence pack. Chakri Lokapriya: Within the defence pack, well Bharat Electronics clearly is well positioned as you say. Hindustan Aeronautics, Mazagon Dock are also looking good. These are all one-off companies in terms of not too many people can make submarines, not too many people can make aircrafts. And outside of that somehow related thing would be railways, but the simple fact that now with the increased scrutiny and border controls, it is likely to see more railway penetration across all the more sensitive areas and therefore, companies like Titagarh Wagons , Jupiter Wagons all these companies are also likely to see, given that they have corrected quite significantly. Just wanted to understand given the market construct right now and all the dynamics at play, is there anything that you are overweight on currently or recommend buying in this market or would you say just sit back because you do not know how the global markets are really going to pan out from here while we have done okay from those March end lows, but guess this is not it. Chakri Lokapriya: You are right, in terms of, we have rebounded quite sharply over the last month and a half, against the backdrop of earnings not actually being cut in this current quarter but we would still be overweight financials and industrials because that is where there will be tailwinds with an RBI rate cut and eventual uptick in corporate earnings and therefore spent. So, I think those are the two areas, within that PSU banks and some of the obvious names in private banks and within industrials the EPC companies. Also, give us some sense that what are you really pencilling in when it comes to the pharma space because just yesterday, we have seen the pharma index was actually in the pink of health and of late, it did not participate much in the kind of selloff or rather volatility that we have seen. Do you believe this still offers value and one should look at for a long-term opportunity, well of course, with earnings CDMO as a segment has done very well. Chakri Lokapriya: The pharma sector is clearly still wait and watch of the US tariffs. The US tariffs actually in the case of pharmaceuticals there is one rate for the branded drugs and one rate for the non-branded, generics, and the non-branded is where largely India belongs. So, there the tariffs are likely to be much lower, but even assuming that there are a 10% tariff that we have in any case, that is largely baked into the numbers and so if that is the number that it turns out with the trade talks, pharma as a sector, companies like Sun they will show that 10% types of growth, they are positioned and the valuations are not heated, so whether it is Sun or Cipla, or Lupin all these companies are positioned for about like a 15-20% upside.
