Latest news with #HarshaUpadhyaya
Economic Times
14-07-2025
- Business
- Economic Times
Where to park money and where to create wealth now? Jyotivardhan Jaipuria answers
Live Events You Might Also Like: Get into mid and smallcaps with a slightly longer-term horizon compared to largecaps: Harsha Upadhyaya You Might Also Like: Is the puck moving from discretionary to consumer staples? Amnish Aggarwal answers (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel , Founder & MD,, says despite uncertainty surrounding US tariffs and the stalled India-US trade deal, a focus on domestic opportunities is advised. Anticipated improvements in domestic demand, fueled by liquidity, interest rate cuts, and tax breaks, make the banking sector attractive due to its valuations. Cement stocks are also promising, with consolidation expected to boost pricing power and earnings over the next 18 you said, Trump's tariffs are the uncertain thing for the market just now and what is probably more critical is like one is the tariffs itself and the other is our tariff versus relatively other countries we compete with. So, at some point, if all the tariffs are going to be 20%, it is not great for US demand, it is not great for inflation in the US, and probably it leads to a slowdown in the on a very competitive basis, we do not lose out with some other country. At the moment, the way it is seeming, we probably will be better off versus a lot of other competitors. We are probably not going to lose out much on the tariff, but it is still a wait and watch because the India-US deal has been on the cards for a long time but still not finalised. In this environment, we are looking at two-three buckets. One is focusing on domestic things which are easier to play, which are less impacted by what happens to the US tariffs and within domestic, we have to remember that we have had easy liquidity, interest rate cuts, and a tax break for the to some extent, we probably will see improvement in domestic demand. We like the banking space more because of the valuations because that is one thing we have to keep in mind. In the last three-four years, most of the domestic names have seen a sharp rise in valuation. So, banks are one area we like. The other is cement, where a lot of cement stocks have not performed for the last two, two-and-a-half has been a consolidation in the sector and we think that will help pricing powers going forward and so the next 18 months will probably be good for cement companies in terms of their earnings as well as the share price, and that is the other domestic segment we are focusing on.: One of the reasons why FMCG has done well is that the stocks have been underperforming massively. Whenever markets start going down on a relative basis, FMCG starts to do well. The other thing is that as we look at the situation just now, monsoons are looking fairly good, cropping has been good, and it looks like the crop will exceed last year's number by a fair margin. We will have a record agricultural crop and when that happens, it will help rural demand. So, FMCG is going to be one of the gainers from rural demand and they will probably benefit from the same time, we have been quite negative on the consumer staple companies and the main reason for that has been valuation. We find it very expensive at these valuations even though these are great companies, and have a lot of the cash flow. The ROEs and ROCs are very high but just given where they trade on valuation, we have been avoiding it. From a structural perspective, as the consumer gets richer and per capita income goes up every year, then it probably doubles over the next six, seven, eight at that time, the share of wallet of consumer staples will go down and consumer discretionary will go up. For us, one way to play the consumer story in India has not been the staples but some of the discretionary names. That is why we have been quite cautious on the consumer staple side.I find the markets having a time correction good. We had quite a steep correction and the markets have seen a bounce-back since then. The macro in India is very good if you look at the current account deficit, fiscal deficit, the RBI monetary policy, inflation, and interest rates falling. The macro looks very good. We are the fastest growing economy on a GDP basis. At the same time, earnings are just the valuations are not cheap and earnings are not coming. We will probably end this quarter also with a single digit earnings growth which in some sense if you think about it, earnings are growing at less than nominal GDP growth. So, for the market to see a sustained rise, you probably see earnings need to start coming back. We need to start seeing double digit earning growth come back. But in the meanwhile, it is very good for us that we are going through a time correction because it helps absorb some of the recent gains. We have seen in the market and probably time correction will help valuations become a little cheaper and which probably makes it easier for the next bull run to general, the domestic story is relatively insulated from what happens to the tariff scenario and anything international has got a risk. Just to give you an example, we like pharmaceuticals. We think the pharma industry is good and over the next five years, we will have visible growth in the same time, the fact there is a threat of tariffs on pharma means that in the short term, you do not really know what this quantum of the tariffs will be and whether it will impact the pharma stocks and the pharma companies in a significant way or a very small way. So, you would rather have the tariff come and then you know what the tariff is, it is easier to evaluate how bad the scenario is going to be in terms of earnings before you really start to buy the same time, there are some stocks which we find very cheap and compelling. So, we have been buying IT but in general, I would say stick more to the domestic names in your portfolio and avoid things that can get impacted significantly by the US tariffs.
Time of India
10-07-2025
- Business
- Time of India
Get into mid and smallcaps with a slightly longer-term horizon compared to largecaps: Harsha Upadhyaya
Harsha Upadhyaya , CIO-Equity, Kotak AMC , says the investment strategy will be more stock-specific and bottom-up, with potentially increased large-cap positions due to relative valuations. While not negative on mid and small-caps, investors should have a longer-term horizon and be prepared for higher volatility . This is because mid and small-caps are trading at higher valuations compared to large-caps. On the broader end of the market, are you liking any particular sectors or stocks? Do you believe that now is the time for the largecaps to take the lead ahead for the markets or do you believe that there is some value on the broader end? Harsha Upadhyaya: The broader end continues to be at a valuation level which is higher than historical levels and higher than largecaps for quite some time now. Although, we did see more volatility in that bucket maybe at the beginning of the calendar year, but post that, we have seen the broader end doing much better than largecaps. So, to that extent, from a pure valuation perspective, there is no sectoral pick in that end of the market. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Join new Free to Play WWII MMO War Thunder War Thunder Play Now Undo We would be more stock specific and bottom-up in terms of our evaluation and wherever we can take slightly higher largecap positions in some of the funds that we have been doing. That is broadly in view of the relative valuations that are there between largecaps and non-largecaps. Otherwise, we are not negative on mid and smallcaps . So, if you are coming into mid and smallcap strategies, please come with a slightly longer-term horizon compared to largecaps and also be ready with slightly higher volatility given that they are trading at a higher valuation and that is what our view has been. Let us look at the current setup where inflation is down, crude is down, dollar is down, and yields are also down. These are classic indicators that macro trade should do well. So, are we in for a macro outperformance which is banks, NBFCs, interest rate sensitives? Harsha Upadhyaya: Looks like that and financials have been outperforming for the last couple of quarters, but not by a wide margin. We may not have seen very large absolute numbers from that portion of the market simply because markets have gone nowhere. But clearly, there has been an outperformance and we believe that segment will continue to do well and over a period of time, that outperformance will increase and become more visible given that we expect improvement in credit growth over the next 12 to 18 months. I was going through your fact sheet and it is quite intriguing to know that the way to play defence according to you is via aerospace. What is it that you find interesting about this pocket and if you can identify some themes or companies within that? Harsha Upadhyaya: We have been very positive on defence for quite some time now and we started building our positions when the government started to focus on indigenization and also larger investments continue to happen into defence. Given that the geopolitical issues are so significant and most of the economies, most of the regions are looking to spend more on defence, clearly we will continue to see higher level of investments going into defence not just in India, but also in other countries. Live Events You Might Also Like: Overweight on domestic businesses; modest earnings growth pickup likely in H2: Harsha Upadhyaya For Indian defence manufacturers, the opportunity is two-fold; one, they can continue to cater to Indian demand and also at some point of time, there will be export opportunities and that is something that we have been very keenly watching. While valuations are on the higher side, we are not increasing our position at this point of time but everything that is focused on aerospace, electronics, etc, and also explosives, which is going to be needed across the board whenever there is a geopolitical issue and a war, are the segments within defence where we have positions and continue to believe that over the medium to long term, this will continue to outperform; However, in the short term, the valuations are on the higher side and one needs to have a little bit of caution. The earning season is just around the corner. We are right there. What are you expecting for earnings this time around? Do you believe that we could do better than last quarter because expectations this time around too are rather tempered? Harsha Upadhyaya : It is unlikely to be anything very exciting, but maybe marginally better than the fourth quarter of last financial year is what we can expect. We believe that in the first two quarters of this financial year, we will be somewhere in the mid to high single digit in terms of earnings growth on Nifty basket and eventually in the second half, they should improve to slightly better numbers and move into double digits. Thereby the overall full year may see 10-11% year-on-year growth. If you are sequentially looking at it, maybe there will be slightly better numbers this quarter, but I do not think that is going to excite the markets in a big way. In the light of no expectations from the earning season, a lot of paper supply, can we say that we should expect a downward bias now? In the next two quarters, there are no triggers, and everyone knows which way inflation is moving, which way tariffs are moving. If demand is coming back from FIIs, supply is coming from promoters. Are we in for a nothing sort of a market or a very low return patch now? Harsha Upadhyaya : Frankly, the last six months have also been more of that nature and that could continue for another couple of quarters. Once there is a little bit of confidence on the earnings trend improving or credit growth improving, that is probably when you will see more legs for the market. Having said that, market volumes at this point of time have not been significant. So, to that extent, any of the liquidity events can drive markets one way or the other, and that is something one needs to keep in mind. You Might Also Like: Betting on consumption? Put 70-75% in discretionary & 20-30% in staples: Gurmeet Chadha
Reuters
20-02-2025
- Business
- Reuters
Indian equity markets' pain to worsen as economy, corporate profits slow
Feb 20 (Reuters) - The nearly five-month-long slide in Indian equities could continue since the slowdown in corporate earnings growth and the exodus of foreign investors will persist as the world's fifth-largest economy sputters, fund managers and analysts said. Since hitting its all-time highs in late September, the benchmark Nifty 50 (.NSEI), opens new tab index has tumbled about 13%, much steeper than a roughly 2% drop in both its Asian (.MIAPJ0000PUS), opens new tab and global emerging market (.dMIEF0000PUS), opens new tab peers. The slide was triggered by a sharp slowdown in profit growth in India's top companies. The earnings growth of the Nifty 50 companies was 5% in the October-December quarter, a third straight quarter of single-digit increases after two years of double-digit jumps, according to brokerage data. That was largely due to weakening urban demand amid high prices and modest income growth. In turn, India's economic growth is expected to slow to a four-year low of 6.4% this fiscal year. "With corporate earnings missing expectations and the rising uncertainty over U.S. tariffs, markets' returns across the board could moderate further," said Harsha Upadhyaya, chief investment officer of equity and president at Kotak Mutual Fund, which manages assets worth about $56 billion. Most analysts expect the market weakness to persist until at least the end of March. WEAK PROFITS, STRONG SALES As the growth in what was once the world's fastest-growing economy stalls, foreign investors too have pulled out in droves. They had bought $12.1 billion worth of Indian stocks from the start of 2024 until the markets peaked in late September. Since then, they have sold $25 billion worth, of which $12.31 billion has come since the start of 2025. Fund managers' allocations to India are at a two-year low, a Bank of America survey released this week showed, with a 19% net underweight position. Only Thailand fared worse among Asian countries. China's recent performance has also sucked away foreign funds, said Sat Duhra, portfolio manager on the Asia ex-Japan equity team at Janus Henderson Investors. India's slowing economic growth also means corporate profits will unlikely pick up pace. Brokerage Jefferies has lowered its full-year profit estimates for 51% of the companies it tracks, while J.P. Morgan says expectations for next fiscal year are still elevated. "We expect India to be under pressure for a number of quarters in light of weak earnings and lofty valuations which leave little room for error," said Duhra. WITHERING VALUATIONS? Despite the markets' tumble, stock valuations are still lofty by some standards. The Nifty 50's forward 12-month price-to-earnings (PE) ratio is about 20, in line with its 10-year average but still among the highest in Asia. The small-cap (.NIFSMCP100), opens new tab index is in a bear market, about 20% below its previous record, but its PE of 24 remains well above its 10-year average of 16. Same with mid-cap (.NIFMDCP100), opens new tab stocks. And with earnings being reined in, so too will prices. "The broader markets may struggle to deliver the returns investors have grown accustomed to," said Rishabh Nahar, partner and fund manager at asset manager Qode Advisors.
