Latest news with #ETMarketsSmartTalk
Time of India
20 hours ago
- Business
- Time of India
ETMarkets Smart Talk: India's market cap could hit $10 trillion by 2030, says ArthAlpha's Rohit Beri
In this edition of ETMarkets Smart Talk, we speak with Rohit Beri, Founder and CEO of ArthAlpha Investment Advisors, who shares his bold outlook on India's equity markets. Beri believes that India's market capitalization could soar to $10 trillion by 2030, backed by strong economic fundamentals, robust domestic participation, and a maturing investment ecosystem. In a wide-ranging conversation, he outlines the key drivers of this potential growth , the sectors poised to benefit, and the evolving behavior of Indian retail investors. Edited Excerpts - Q) The month of May started on a volatile note with benchmark indices witnessing wild swings on either side. How are you reading into markets? A) The market entered May on the back of a strong run in March and April, fuelled by expectations of robust FY25 earnings , optimism around a soft landing in the U.S., and India-specific tailwinds like PLI schemes, infrastructure push, and resilient consumption. However, the mood has shifted sharply this month. We're seeing wide intraday moves, sector rotation, and an overarching sense of indecision. A key factor driving this volatility is the global risk reset. The U.S. CPI print for April came in hotter than expected, renewing concerns of prolonged high interest rates. This has strengthened the dollar, pushed up U.S. bond yields, and triggered foreign institutional outflows from emerging markets, including India. Despite strong fundamentals, India isn't immune in such risk-off environments. Domestically, we're at an earnings season crossroads. Valuations remain elevated, with the Nifty trading around 21x forward earnings. While PSU and infra-related names have performed well, sectors like IT and autos have disappointed. Some large-cap downgrades have only added to the nervousness. In such an environment, my approach is to stay tactically cautious in the short term. The market currently lacks a clear trend, with breakouts often failing and sentiment reacting sharply to global data or large-cap earnings. This creates a challenging backdrop but also short-term opportunities, particularly in stocks exhibiting high implied volatility but low realised volatility, which can be favourable for option writing strategies. Live Events Looking further ahead, I remain cautiously optimistic. The structural positives supporting India's growth story—healthy GDP growth projected around 6.5% for FY26, easing inflation, and strong government focus on infrastructure and manufacturing—are still firmly in place. It's likely that what we're seeing is more of a time correction rather than a full-blown trend reversal. This makes buying on dips in sectors with strong tailwinds, such as railways, defence, capital goods, and private banks, a prudent strategy. At ArthAlpha, we rely on a multi-factor quantitative approach powered by AI, which helps smooth the ride during periods of turbulence. Our focus on mean reversion strategies has proven effective in managing volatility, allowing us to adapt quickly as market dynamics evolve. Q) What sense are you making from the March quarter results? Are downgrades more than upgrades this time around? A) The results for the March quarter provide a mixed overview. Although the overall headline figures exceeded expectations, there have been more earnings downgrades than upgrades across various sectors. This indicates that companies and analysts are exercising increased caution due to ongoing macroeconomic uncertainties, inflation pressures, and some disruptions in corporate earnings momentum. Certain sectors, especially those facing demand challenges or operational inefficiencies, have been impacted more heavily by downgrades. At the same time, a smaller group of companies continues to drive earnings growth, indicating a more selective investment environment. From a strategic perspective, this quarter highlights the importance of focusing on quality and resilience. Sectors like metals, BFSI, defence, and consumer durables have demonstrated stronger fundamentals and relative stability. Investors would do well to monitor earnings revisions closely, as these trends can signal where growth pockets are emerging despite the broader caution. Overall, the results underline the need for a balanced approach, being mindful of risks while identifying selective opportunities in resilient sectors and companies with robust business models. This approach will be critical to navigating the evolving economic landscape ahead. Q) We have seen IndusInd Bank results, and more skeletons could come out of the closet in the near future. What should investors do who are invested in these types of companies with corporate governance issues? A) When signs of corporate governance concerns arise—as we've seen hinted in IndusInd Bank's Q4FY25 results—it is essential that investors respond promptly and rationally, rather than emotionally. Such issues often unfold gradually at first, then escalate quickly, resulting in sudden, sharp declines in value. Governance concerns are a serious red flag because trust is the true capital, especially in financial services. Once trust is lost, rebuilding it is very difficult. Past examples like Yes Bank, DHFL, IL&FS, and even earlier episodes involving IndusInd show how rapidly market sentiment can turn against a company, regardless of how sound its fundamentals might appear. Valuation re-rating in such situations tends to be swift and severe. For investors currently holding shares in companies with governance issues, a structured approach is advisable: Firstly, do not wait for full clarity before acting. By the time all facts become public, the share price will usually have already adjusted. Unless you have an informational edge, the safer approach is to exercise caution, rather than hope for the best. Secondly, assess your portfolio exposure carefully. If your holding represents less than 5% of a diversified portfolio, you may choose to monitor developments closely. However, if it accounts for more than 10% and is concentrated, it would be prudent to consider rebalancing or applying hedging strategies. Thirdly, if the stock price rallies temporarily—whether due to a relief rally or broader market strength—use this as an opportunity to exit, not a reason to hold or increase exposure. Averaging down in these circumstances often turns risk into a trap. Fourthly, consider reallocating your capital towards companies with stronger governance. If exiting immediately is not feasible, option hedges can help protect downside risk. Ultimately, the guiding principle is to protect your capital. Your role is not to investigate the company's internal affairs, but to manage risk effectively. Even a 10–15% chance of fraud, regulatory action, or accounting irregularities justifies reducing or exiting your position. Markets may forgive missed opportunities, but they rarely forgive ignoring clear governance red flags. Q) What is the long-term outlook for Indian equities over the next few years? A) The long-term outlook for Indian equities appears highly promising, with a structurally bullish market expected to prevail through 2030. This optimism is grounded in strong macroeconomic fundamentals, favourable demographic trends, and improving corporate earnings. However, it's important to approach this growth story with caution and selectivity, as elevated valuations and intermittent volatility—triggered by global or domestic events—could pose challenges. A diversified and well-researched investment approach will be essential for effectively participating in India's equity growth journey. India's economic momentum remains robust, positioning it to continue as the fastest-growing major economy with an anticipated GDP growth rate between 6.5% and 7% through the fiscal year 2030. Unlike previous cycles, the current growth phase is notably investment-driven, supported by a revival in private capital expenditure, a strong government focus on infrastructure development, and early successes in manufacturing propelled by initiatives like the Production Linked Incentive (PLI) scheme. Demographics and digital infrastructure offer powerful tailwinds for the market's long-term trajectory. With over 65% of the population under 35 years old, natural demand is rising across sectors such as housing, mobility, credit, and consumption. Meanwhile, India's digital public infrastructure—comprising platforms like UPI, Aadhaar, ONDC, and GST—is formalizing the economy further, broadening tax bases, and fostering a more inclusive framework for sustained growth. Corporate profitability is on the rise as well. Profits as a share of GDP have doubled from 2% in 2017 to around 4% today, with further upside potential. The banking sector has cleaned up significantly, enabling renewed credit growth. Additionally, new profit pools are emerging across sectors like defence, manufacturing, renewables, logistics, and railways, diversifying the drivers of corporate earnings. Despite these structural strengths, investors should remain mindful of certain headwinds. Valuations are currently rich, with the Nifty trading near the upper end of its historical price-to-earnings range. Geopolitical tensions—whether in the Middle East or with China—and commodity price shocks, especially crude oil, have the potential to disrupt India's macroeconomic environment. Furthermore, global influences such as US Federal Reserve policy changes, inflationary pressures, or a global economic slowdown could prompt short-term foreign institutional investor outflows. Governance risks in the mid- and small-cap segments also warrant careful scrutiny. The broader market consensus from global investment firms like Goldman Sachs, Jefferies, and Morgan Stanley remains bullish. Many project that India could rise to become the world's third-largest economy between 2027 and 2030. Nifty earnings are expected to grow at a healthy compound annual growth rate (CAGR) of 15–17% over the next three to five years, with the country's total market capitalization potentially crossing $10 trillion by 2030—a significant leap from around $4 trillion today—driven by increased formalization, greater retail participation, and a surge in new-age IPOs. In summary, Indian equities appear to be in the early innings of what could be a multi-decade growth story. Yet, success in this journey will depend on sticking to quality businesses characterized by strong governance and pricing power, maintaining investments through the inevitable market cycles, and staying agile to rotate across emerging themes as the economic and policy landscape evolves. Q) Which sectors are expected to deliver strong returns going forward? Any safe bets investors can consider? A) That's a great question, and quite relevant given where we are in the market cycle. In India, both structural themes and sectoral rotations play a big role, so it helps to look at this from a medium- to long-term lens. Let's start with Capital Goods & Infrastructure. We're in the midst of a full-fledged capex cycle revival — from public infrastructure to railways, defence, and logistics. With strong budget allocations and supportive schemes like PLI and Make-in-India, this space has high earnings growth visibility over a 3–5 year horizon. Defence & Aerospace is another long-term structural theme. The Atmanirbhar Bharat push has driven strong order inflows, and India's defence exports are scaling up. It's a sector with 5+ years of strategic investment potential, supported by robust government spending. Then there's Power & Renewables, where the transition to clean energy is accelerating. Rising solar and wind capacity, smart grid upgrades, and energy storage are no longer fringe ideas — they're mainstream policy priorities. This offers a 3–7 year horizon driven by secular green energy trends. Private Sector Banks & Insurance are looking healthy again. With balance sheets cleaned up and credit growth returning, banks are well-positioned. Insurance remains significantly underpenetrated, offering secular upside. We see this as a 3–5 year compounding story. Real Estate is also seeing renewed interest, selectively. Residential demand is firm, interest rates have stabilised, and affordability continues to support growth. Real estate proxies like cement, tiles, pipes, and paints are benefiting too. Here, we're looking at a 2–4 year domestic consumption-driven horizon. On the other hand, if someone's looking for more stability in their portfolio, a few 'safer' sectors stand out: ● Consumer staples and FMCG — solid cash flows, pricing power, and resilience even in weak markets. ● IT services — while the near-term outlook is a bit cloudy, the long-term digitisation trend remains intact. It's a space to look at selectively, especially on dips. ● Healthcare and diagnostics, in particular, remain a multi-year play, supported by India's ageing population, rising exports, and increasing formalisation of the sector. To sum it up, blending high-growth sectors like infra and green energy with low-beta anchors like banks or FMCG can offer both upside and protection across cycles. Q) How can high-net-worth individuals effectively build wealth in the current market environment? A) In today's fast-moving and often unpredictable market, high-net-worth individuals (HNIs) find themselves in a unique position. They have access to differentiated investment avenues, a higher risk appetite, and the capital to take a long-term view. But building wealth effectively in 2025 isn't just about seizing opportunities—it's about doing so with structure and intent. At ArthAlpha, we believe a resilient wealth strategy rests on three core pillars: preservation, growth, and tactical agility. The first priority is capital preservation—a stable foundation that helps portfolios weather volatility while compounding steadily. This includes exposure to large-cap equities through mutual funds, PMS, or direct holdings in companies with strong fundamentals such as HDFC Bank, L&T, or TCS. Fixed income instruments, too, deserve a place—particularly sovereign green bonds, RBI offerings, or high-rated corporate debt, especially when accessed through more sophisticated vehicles like AIFs or FMPs. Global diversification also plays a vital role. Allocating a portion to global markets like the S&P 500 or Nasdaq via LRS, feeder funds, or ETFs provides a hedge against rupee depreciation and taps into broader economic trends. And increasingly, income-generating alternatives such as REITs and InVITs are proving to be reliable, low-correlation additions to this base layer. Building on this, the next layer focuses on growth and alpha—deliberate exposure to structural opportunities with the potential to outperform. Active strategies, such as long-short Category III AIFs or quant-driven models like ArthAlpha's MEQ strategy, can be powerful alpha generators. Thematic investing is also gaining momentum, with focused allocations in sectors like defence, green energy, or digital infrastructure that align with India's transformation story. Meanwhile, selective exposure to private equity and late-stage venture capital—often accessed through curated family office platforms or syndicates—offers participation in India's thriving startup ecosystem. Even real estate, when approached tactically, holds merit: rental-yielding commercial or high-demand residential properties in Tier-1 cities continue to offer both income and capital appreciation, especially in line with the country's rapid urbanisation. Finally, a degree of tactical allocation offers the agility to respond to dislocations or asymmetric bets. This could involve selective participation in IPOs or pre-IPOs, particularly in high-growth sectors like fintech or electric mobility. Special situations or distressed asset strategies—accessed via private pools or specialised AIFs—can also unlock value during market cycles. And of course, in an environment of elevated macro uncertainty, gold and digital gold continue to function as prudent hedges within a diversified portfolio. Across all these layers, a few principles are non-negotiable. Tax optimisation, more than ever, has become a key differentiator—how you structure your investments is as important as what you invest in. Governance should guide allocation decisions; the quality of promoters, transparency, and regulatory structure matter. Diversification—across geography, currency, and strategy—can help buffer against divergent global and domestic cycles. And maintaining a liquidity buffer ensures that short-term needs or tactical opportunities don't disrupt long-term plans. Ultimately, building wealth today isn't about chasing every trend—it's about aligning your capital with conviction, structure, and purpose. At ArthAlpha, we work closely with each client to tailor this approach to their life stage, legacy aspirations, and risk appetite—ensuring their portfolios aren't just positioned for growth, but for resilience and relevance in the years ahead. Q) What is your take on gold's recent surge beyond ₹1 lakh in the physical market? Is it the right time for investors to increase their allocation, or should they wait for a cooldown? A) Gold has historically been regarded as a safe haven during periods of economic uncertainty, and its recent surge past ₹1 lakh in the physical market is a reflection of heightened investor interest amid global volatility. Whether this is the right time to increase allocation or wait for a potential cool-off depends largely on one's investment horizon and risk appetite. For those looking to hedge against inflation or diversify their portfolios, a gradual accumulation approach could be sensible. However, considering current elevated levels, waiting for a modest price correction may offer better entry points, particularly for investors focused on maximising returns. Several factors are driving the current strength in gold prices in 2025. On the global front, macroeconomic stress continues, with U.S. inflation coming in higher than expected, leading to delays in rate cuts and increased bond market volatility. Central banks, notably in China and Russia, have been aggressively buying gold as part of their reserve diversification strategies. Domestically, the weakening of the rupee and the impact of import duties have amplified the rise in gold prices, making the domestic surge even sharper than global trends. Geopolitical tensions—ranging from the Middle East to Russia and Taiwan—have further reinforced gold's position as a geopolitical hedge. Additionally, the ongoing U.S.-China trade tensions and uncertainties surrounding the Trump factor are prompting a flight to safety. Investor behaviour is also playing a significant role. With equity markets experiencing volatility, both retail investors and high-net-worth individuals (HNIs) are increasingly allocating capital to gold through ETFs, sovereign gold bonds, and physical purchases. In the near term (1–3 months), the outlook on gold is neutral to moderately positive. While the asset appears technically overbought and short-term corrections are likely, strong global and domestic tailwinds suggest that any dips will likely be viewed as buying opportunities. Over the long term (1–3 years), the view remains positive. Global real interest rates are expected to remain low, and central banks are likely to maintain accommodative policies. Gold is being increasingly perceived as strategic portfolio insurance rather than merely an inflation hedge. Moreover, India's structural demand—from weddings and festivals to the growing adoption of retail gold ETFs—continues to support a strong long-term case. In conclusion, while it may not be advisable to chase gold at the ₹1 lakh level, it would also be unwise to avoid it altogether. Investors may consider systematic entries, partial allocations, or opportunistic additions during market corrections. Ultimately, gold should be viewed as a form of portfolio insurance rather than a primary source of returns.
Economic Times
2 days ago
- Business
- Economic Times
ETMarkets Smart Talk - Auto, QSR, and defence among top picks in current market cycle: PL Capital's Sandip Raichura
In this edition of ETMarkets Smart Talk, Sandip Raichura, Executive Director and CEO – Retail and Distribution at PL Capital Group, shares his market outlook amidst global uncertainties and domestic the broader indices may face near-term pressure, Raichura believes momentum in Indian equities remains intact, driven by a combination of structural and cyclical factors. In an insightful conversation, he outlines why Auto, QSR (Quick Service Restaurants), and Defence sectors are emerging as strong investment themes in the current market cycle, and how investors—both retail and HNIs—can position their portfolios for the long haul. Edited Excerpts - ADVERTISEMENT Q) Thanks for taking the time out. The month of May started on a volatile note with benchmark indices witnessing wild swings on either side. How are you reading into markets?A) We had earlier forecast a recovery from 22k levels to 25k levels currently. We now expect the indices to face some near-term downward pressure as a lot of global developments are keeping markets on tenterhooks. However, a good and timely monsoon coupled which could spur rural demand, tax breaks for the middle classes in the Union Budget and globally, positive developments on tariff wars could keep the markets positively biased. We expect Nifty to have reached its fair value around current levels, but momentum could carry these higher especially if the US dollar corrects from 99 levels towards 92 or so. Any rate cuts by RBI beyond expectations could of course have a much stronger positive impact Q) What is the sense you are making from the March quarter results? Are downgrades more than upgrades this time around? A) While the overall earnings season has shown resilience in certain sectors, the prevalence of downgrades suggests caution among investors. ADVERTISEMENT March 2025 Quarter has presented a mixed picture, with a notable trend of earnings downgrades surpassing upgrades. The Earnings upgrade-to-downgrade ratio stood at 0.3x, the lowest since Q1FY21. Q) We have seen IndusInd bank results, and more skeletons could come out of the closet in near future. What should investors do who are invested in these type of companies with corporate governance issues? ADVERTISEMENT A) Our sense is that most of the lapses have been corrected, and no significant deviations are expected. For FY26/27E we trim loan growth by 5%/2% to 8%/11% and subsequently due to cascading effect cut NII by 15%/13%.This would result in an earnings cut of 31%/26% and ABV reduction of avg. 8.6%. RBI has requested proposals for new CEO appointment by 30th Jun'25; near to medium term performance would hinge on the pedigree of the prospective CEO and the respective strategy to improve governance, credibility and fundamentals. ADVERTISEMENT Stock is trading at 0.8x on Mar'27 ABV; we maintain multiple at 0.9x but cut TP to Rs780 from Rs860. Retain HOLD. Q) What is the long-term outlook for Indian equities over the next few years?A) Markets seem to have digested the uncertainty related to global tariff wars on hopes of lesser disruption and trade agreements by major an end to global turmoil is not in sight as Chinese growth is slowing down, US interest rates are holding steady and interest rates in Japan are moving up. ADVERTISEMENT Overall, the scenario is ripe for another 50bps rate cut by RBI over the next 6 months, however the declining rate differential with US and other large economies is a key factor to watch out for. Q) Which sectors are expected to deliver strong returns going forward? Any safe bets which investors can consider? A) We expect benefits for Auto, Hotels, Airlines, Durables/ electronics, QSR, Apparel, Footwear, Building Material, Household Goods, Paints and addition, Capital Goods, Defence, Hospitals, Pharma, EMS, Travel and Telecom continue to have positive added Sun Pharmaceutical Industries, Rainbow Children's Medicare and Hindustan Aeronautics in conviction picks. Q) How can high-net-worth individuals effectively build wealth in the current market environment? A) We believe larger investors should have a slightly large cap biased portfolio – from the NSE 100 index typically, apart from some exposure to quality stocks like Hinduja Finance, NSE etc in the unlisted are not very confident that the evolving situation is ideal for weak balance sheets or internationally exposed companies and for that reason, we recommend staying invested in well-known also believe longer tenor bond funds could be looked at as we possibly are headed towards a decline in long duration interest rates especially if GDP growth doesn't pick up speed and inflation remain under conservative investors may want to look at dynamic bond funds and gold in their portfolios from a 2-year perspective Q) What is your take on Gold? Recently, it crossed Rs 1 lakh in the physical market. Right time to increase allocation or investors should wait for some cool off? A) Gold is on a structural bull run and continuous buying by central banks right from USD 2200 levels continues believe that we are in for major changes in the way the world trades with each other and of course, the Ukraine Russia conflict will keep gold buoyant as well. Declines in USD may also support positive moves. We believe gold has to be at least 5% of client portfolios even at current levels. (Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Time of India
2 days ago
- Business
- Time of India
ETMarkets Smart Talk - Auto, QSR, and defence among top picks in current market cycle: PL Capital's Sandip Raichura
Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads In this edition of ETMarkets Smart Talk, Sandip Raichura, Executive Director and CEO – Retail and Distribution at PL Capital Group, shares his market outlook amidst global uncertainties and domestic the broader indices may face near-term pressure, Raichura believes momentum in Indian equities remains intact, driven by a combination of structural and cyclical an insightful conversation, he outlines why Auto, QSR (Quick Service Restaurants), and Defence sectors are emerging as strong investment themes in the current market cycle, and how investors—both retail and HNIs—can position their portfolios for the long haul. Edited Excerpts -A) We had earlier forecast a recovery from 22k levels to 25k levels currently. We now expect the indices to face some near-term downward pressure as a lot of global developments are keeping markets on a good and timely monsoon coupled which could spur rural demand, tax breaks for the middle classes in the Union Budget and globally, positive developments on tariff wars could keep the markets positively expect Nifty to have reached its fair value around current levels, but momentum could carry these higher especially if the US dollar corrects from 99 levels towards 92 or so. Any rate cuts by RBI beyond expectations could of course have a much stronger positive impactA) While the overall earnings season has shown resilience in certain sectors, the prevalence of downgrades suggests caution among 2025 Quarter has presented a mixed picture, with a notable trend of earnings downgrades surpassing upgrades. The Earnings upgrade-to-downgrade ratio stood at 0.3x, the lowest since Q1FY21.A) Our sense is that most of the lapses have been corrected, and no significant deviations are expected. For FY26/27E we trim loan growth by 5%/2% to 8%/11% and subsequently due to cascading effect cut NII by 15%/13%.This would result in an earnings cut of 31%/26% and ABV reduction of avg. 8.6%. RBI has requested proposals for new CEO appointment by 30th Jun'25; near to medium term performance would hinge on the pedigree of the prospective CEO and the respective strategy to improve governance, credibility and is trading at 0.8x on Mar'27 ABV; we maintain multiple at 0.9x but cut TP to Rs780 from Rs860. Retain HOLD.A) Markets seem to have digested the uncertainty related to global tariff wars on hopes of lesser disruption and trade agreements by major an end to global turmoil is not in sight as Chinese growth is slowing down, US interest rates are holding steady and interest rates in Japan are moving the scenario is ripe for another 50bps rate cut by RBI over the next 6 months, however the declining rate differential with US and other large economies is a key factor to watch out for.A) We expect benefits for Auto, Hotels, Airlines, Durables/ electronics, QSR, Apparel, Footwear, Building Material, Household Goods, Paints and addition, Capital Goods, Defence, Hospitals, Pharma, EMS, Travel and Telecom continue to have positive added Sun Pharmaceutical Industries, Rainbow Children's Medicare and Hindustan Aeronautics in conviction picks.A) We believe larger investors should have a slightly large cap biased portfolio – from the NSE 100 index typically, apart from some exposure to quality stocks like Hinduja Finance, NSE etc in the unlisted are not very confident that the evolving situation is ideal for weak balance sheets or internationally exposed companies and for that reason, we recommend staying invested in well-known also believe longer tenor bond funds could be looked at as we possibly are headed towards a decline in long duration interest rates especially if GDP growth doesn't pick up speed and inflation remain under conservative investors may want to look at dynamic bond funds and gold in their portfolios from a 2-year perspectiveA) Gold is on a structural bull run and continuous buying by central banks right from USD 2200 levels continues believe that we are in for major changes in the way the world trades with each other and of course, the Ukraine Russia conflict will keep gold buoyant as in USD may also support positive moves. We believe gold has to be at least 5% of client portfolios even at current levels.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Economic Times
5 days ago
- Business
- Economic Times
ETMarkets Smart Talk: Sachin Relekar on consumption & defense: Top themes for future wealth creation for long term investors
Welcome to ETMarkets Smart Talk. In this insightful session, we sit down with Sachin Relekar, Senior Equity Fund Manager at Axis Mutual Fund, who shares his expert views on the key themes driving India's equity highlights consumption and defense as pivotal sectors offering promising opportunities for long-term wealth creation. Amid global uncertainties and evolving domestic policies, he explains why these themes are well-positioned to benefit from India's structural growth story. Edited Excerpts – ADVERTISEMENT Q) The month of May started on a volatile note with benchmark indices witnessing wild swings on either side. How are you reading into markets?A) Since the beginning of 2025, several significant macroeconomic events have unfolded. The year commenced with a change in the US presidency, leading to a review of trade relationships with an "America First" objective. In April, the US announced reciprocal tariffs across countries in varying degrees, followed by major changes, including a 90-day pause in tariffs with all countries including China. There is also an expectation that in the coming days the US will sign trade deals with other countries. While these announcements are being made rapidly, the implementation is likely to be slow due to the importance and complexities May, India experienced a geopolitical situation which while brief, its impact was substantial. Both global and domestic capital markets reacted to these macroeconomic events in May, and it is expected that these events will continue to influence market movements in the near term. ADVERTISEMENT However, we believe that the extreme negativity from these events has already been priced in. Moving forward, greater clarity on trade relations is anticipated, which will provide direction to the the medium to long term, our outlook remains largely positive, given the stronger domestic economic prospects. ADVERTISEMENT Q) What is the sense you are making from the March quarter results? Are downgrades more than upgrades this time around?A) The earnings season has produced a mixed set of results. Companies with exposure to developed markets have reported lower earnings, which was within the consumer staples segment continue to experience lower volume growth, while consumer discretionary companies have reported weaker numbers. However, internet, telecom, and select capital goods companies have delivered positive results. ADVERTISEMENT Q) What is the long-term outlook for Indian equities over the next few years? A) We believe that India represents a long-term growth story. Our positive outlook is particularly focused on the consumption sector, with a strong emphasis on the consumer discretionary is a significant long-term trend that is expected to drive sustained growth in this area. ADVERTISEMENT Government policies are clearly designed to support domestic manufacturing, which is a critical component of India's economic strategy. The defense sector, as a thematic investment, may also hold a positive long-term outlook due to ongoing government initiatives and increased budget allocations. Overall, there are several promising themes to consider. Listed companies in India appear to have healthier balance sheets, which enhances their ability to capitalize on growth opportunities. These factors collectively contribute to a favorable long-term equity outlook for India. Q) Which sectors are expected to deliver strong returns going forward? Any safe bets which investors can consider? A) There are several interesting themes and sectors which we believe may benefit from the healthy domestic economic growth and government policies. Some of them can be consumption, consumer discretionary, etc. Q) How can high-net-worth individuals effectively build wealth in the current market environment? A) The investment outlook over the long term is largely positive. While investing one however needs to be disciplined about the management quality, business competitiveness and the same time one should take a longer-term view of the opportunity to meaningfully benefit. Last but not the least, it is important to be disciplined about asset allocation. It plays most important role in determining the financial outcomes. Q) What is your take on Gold? Recently, it crossed Rs 1 lakh in the physical market. Right time to increase allocation or investors should wait for some cool off? A) Gold is currently responding to the uncertainty surrounding global macroeconomic conditions. Should these conditions stabilize and improve, the support for gold may it is essential to focus on prudent asset allocation. Given the natural fluctuations of markets, strategic asset allocation is crucial for wealth building.A diversified portfolio is generally effective, provided one has the patience to maintain it over the long term.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
5 days ago
- Business
- Time of India
ETMarkets Smart Talk: Sachin Relekar on consumption & defense: Top themes for future wealth creation for long term investors
Welcome to ETMarkets Smart Talk. In this insightful session, we sit down with Sachin Relekar , Senior Equity Fund Manager at Axis Mutual Fund , who shares his expert views on the key themes driving India's equity markets. Sachin highlights consumption and defense as pivotal sectors offering promising opportunities for long-term wealth creation. Amid global uncertainties and evolving domestic policies, he explains why these themes are well-positioned to benefit from India's structural growth story. Edited Excerpts – Q) The month of May started on a volatile note with benchmark indices witnessing wild swings on either side. How are you reading into markets? A) Since the beginning of 2025, several significant macroeconomic events have unfolded. The year commenced with a change in the US presidency, leading to a review of trade relationships with an "America First" objective. In April, the US announced reciprocal tariffs across countries in varying degrees, followed by major changes, including a 90-day pause in tariffs with all countries including China. There is also an expectation that in the coming days the US will sign trade deals with other countries. While these announcements are being made rapidly, the implementation is likely to be slow due to the importance and complexities involved. In May, India experienced a geopolitical situation which while brief, its impact was substantial. Both global and domestic capital markets reacted to these macroeconomic events in May, and it is expected that these events will continue to influence market movements in the near term. However, we believe that the extreme negativity from these events has already been priced in. Moving forward, greater clarity on trade relations is anticipated, which will provide direction to the market. Over the medium to long term, our outlook remains largely positive, given the stronger domestic economic prospects. Q) What is the sense you are making from the March quarter results? Are downgrades more than upgrades this time around? A) The earnings season has produced a mixed set of results. Companies with exposure to developed markets have reported lower earnings, which was anticipated. Companies within the consumer staples segment continue to experience lower volume growth, while consumer discretionary companies have reported weaker numbers. However, internet, telecom, and select capital goods companies have delivered positive results. Q) What is the long-term outlook for Indian equities over the next few years? A) We believe that India represents a long-term growth story. Our positive outlook is particularly focused on the consumption sector , with a strong emphasis on the consumer discretionary segment. Urbanization is a significant long-term trend that is expected to drive sustained growth in this area. Government policies are clearly designed to support domestic manufacturing, which is a critical component of India's economic strategy. The defense sector , as a thematic investment, may also hold a positive long-term outlook due to ongoing government initiatives and increased budget allocations. Overall, there are several promising themes to consider. Listed companies in India appear to have healthier balance sheets, which enhances their ability to capitalize on growth opportunities. These factors collectively contribute to a favorable long-term equity outlook for India. Q) Which sectors are expected to deliver strong returns going forward? Any safe bets which investors can consider? A) There are several interesting themes and sectors which we believe may benefit from the healthy domestic economic growth and government policies. Some of them can be consumption, consumer discretionary, etc. Q) How can high-net-worth individuals effectively build wealth in the current market environment? A) The investment outlook over the long term is largely positive. While investing one however needs to be disciplined about the management quality, business competitiveness and valuation. At the same time one should take a longer-term view of the opportunity to meaningfully benefit. Last but not the least, it is important to be disciplined about asset allocation. It plays most important role in determining the financial outcomes. Q) What is your take on Gold? Recently, it crossed Rs 1 lakh in the physical market. Right time to increase allocation or investors should wait for some cool off? A) Gold is currently responding to the uncertainty surrounding global macroeconomic conditions. Should these conditions stabilize and improve, the support for gold may diminish. Therefore, it is essential to focus on prudent asset allocation. Given the natural fluctuations of markets, strategic asset allocation is crucial for wealth building. A diversified portfolio is generally effective, provided one has the patience to maintain it over the long term.
