Latest news with #JitendraGohil
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Business Standard
10 hours ago
- Business
- Business Standard
Will GST reform, S&P Global upgrade bring FIIs back to Indian stock market?
The recent developments – proposed changes to the goods and services tax (GST) rates and S&P Global Ratings' upgrade of India's long-term sovereign credit rating to BBB from the lowest investment grade of BBB-, with a stable outlook, - may not be enough to bring back foreign investors back to Indian equity markets in a rush, feel analysts. For a meaningful return to Indian shores, an improvement in corporate earnings along with a stable policy framework – both back home and globally (in the form of tariffs) – is a must, they suggest. 'Policy initiatives from the Government on the GST front with indications of next generation reforms have improved market sentiments significantly. However, the fundamentals (earnings growth) will take time to respond. A sustained market rally will happen only when we have indications of earnings revival,' said VK Vijayakumar, Chief Investment Strategist at Geojit Investments. Thus far in calendar year 2025 (CY25), foreign institutional investors have dumped Indian equities worth Rs 1.17 trillion, shows NSDL data, with January seeing the highest sell-off totaling nearly Rs 78,000 crore. In August, they had already sold stocks worth Rs 22,200 crore, according to NSDL. Foreign investors, said Jitendra Gohil, chief investment strategist at Kotak Alternate Asset Managers, are looking to invest more in emerging markets (EMs) now as the artificial intelligence (AI)-led rally in the United States has made the related stocks overheated. FII flows 'India has been an underperformer due to a soft economic patch and corporate earnings. The second half of the fiscal 2025-26 (FY26) could see more policy initiatives by the government. Corporate earnings, too, are likely to pick up in the quarters ahead driven by the festival season and rate cuts by the Reserve Bank of India (RBI). The rating upgrade will be seen as a long-term positive by FIIs. The only surprise element amid all these positives is how the tariffs play out, which could keep investors at bay,' he said. Corporate earnings As regards corporate earnings, the Nifty, according to analysts at Motilal Oswal Financial Services (MOFSL), delivered an 8 per cent year-on-year (YoY) growth in profit after tax (PAT) versus their estimates of a 5 per cent uptick. 'Bharti Airtel, Reliance Industries (RIL), State Bank of India (SBI), HDFC Bank, and ICICI Bank contributed 77 per cent of the incremental YoY accretion in earnings. Conversely, Coal India, Tata Motors, IndusInd Bank, ONGC, HCL Technologies, Kotak Mahindra Bank, Axis Bank, Eternal, Hindustan Unilever (HUL), and Nestle contributed adversely to the earnings,' MOFSL said. "Net income and earnings before interest, taxes, depreciation and amortization (EBITDA) of the Nifty-50 Index is likely to grow 9.6 per cent and 13 per cent in FY26 versus 6.5 per cent and 4.5 per cent in FY25," wrote Sanjeev Prasad, managing director and co-head of Kotak Institutional Equities (KIE) in a recent coauthored note with Anindya Bhowmik and Sunita Baldawa. Buy the dip That said, any tariff-related development that triggers a correction in Indian equities, analysts advise, should be used to buy from a long-term perspective. 'The 50 per cent tariff should not be seen as a reason to sell Indian equities. Rather it is probably a reason to buy them. It is only a matter of time before Trump backs off the stance (on tariffs on India). For investors, it is now too late to cut India exposure with valuations now back near the 10-year average,' Wood said.
Time of India
a day ago
- Business
- Time of India
US tariffs could shave 0.3–0.6% off India's GDP: Kotak Alternate's Jitendra Gohil
Q) With Washington's additional 25% levy—doubling U.S. tariffs on Indian goods to 50%—how are you reading into this for Indian Inc.? Live Events Q) Do you think with external headwinds the process of generating alpha will be more challenging? Q) How are you reading into June quarter results of India Inc.? Q) What is your call on valuations? Q) FIIs sold aggressively in July. Should Indian investors be cautious? Q) From a retail perspective, could money move to fixed income as volatility grips D-Street? Q) Which sectors look attractive? (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel In an exclusive conversation with ETMarkets Smart Talk, Jitendra Gohil , Chief Investment Strategist at Kotak Alternate Asset Managers , warned that Washington's move to double tariffs on Indian goods to 50% could shave 0.3–0.6% off India's GDP if the levies described the hike as a possible negotiation tactic aimed at pressuring Russia to end the war while weakening India's trade cautioned that the next two weeks will be crucial, as the outcome hinges on factors such as a potential US–China trade deal, government support for exporters and MSMEs, RBI policy actions, and currency movements. Edited excerpts:This is most likely a negotiation tactic aimed at pressuring Russia to end the war while also weakening India's position in trade negotiations. The next two weeks are extremely crucial. India is resisting, but these uncertainties may temporarily impact corporate profitability, investor sentiment, and short-term severity of the impact will depend on several factors, including the potential U.S.-China trade deal, government support for exporters and MSMEs, further RBI easing, and currency depreciation. If tariffs persist, the GDP impact could range from 0.3% to 0.6%. That said, the degree of negative impact on corporate earnings remains difficult to gauge at this is a favorable market for active fund managers, as seen in the divergence between large private banks and major IT companies over the past year. Markets often react to events in isolation, but a confluence of factors can offset the perceived instance, when the U.S. bombed Iran, analysts began pricing in higher oil prices, but few accounted for the potential supply increase from OPEC. Similarly, when recession fears gripped the U.S., many underestimated the scope for fiscal alpha in such an environment requires extraordinary effort in understanding macroeconomic and geopolitical developments, which often shape markets in unexpected quarter results were affected by seasonal and structural factors. We believe corporate earnings will be structurally weaker going forward—not because the economy is underperforming. In fact, the economy is strong and may even exceed earnings could be weighed down by heightened competition, record-high margins and ROEs, and businesses diversifying into unrelated areas. Expectations for the next quarter rest on a rural recovery and a strong festive season, which may lift valuations remain expensive and may stay so. To find value, one must look for turnaround stories, which are generally difficult and risky. It is essential to identify areas supported by emerging macroeconomic and political have been cautious on emerging markets, particularly India, due to tariffs, high valuations, INR depreciation, and a weak Q1. They remain underweight large-caps where earnings growth has been tepid, though midcaps have seen selective Indian investors are following a buy-on-dips strategy, which has helped cushion against large FPI exits. July is a good example of this a post-tax basis, plain-vanilla fixed income offers sub-par returns. Investors should diversify into REITs, commodities like gold and silver, and maintain long-term equity-oriented strategies to beat inflation. The financialization of savings into equities is a long-term trend, and these corrections are unlikely to derail it.A) In the short term, sectors tied to domestic consumption revival—such as hotels, consumer discretionary, and malls—look promising. Rural consumption is expected to pick up, benefiting tractors, select auto companies, and certain NBFCs and the IT sector may see further correction, valuations are reasonable, and we expect buying interest despite ongoing disruptions.: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
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Business Standard
03-08-2025
- Business
- Business Standard
Use any tariff-triggered market correction to buy, says Jitendra Gohil
India is in a unique position where the return on equity for BSE 500 companies is among the best globally, second only to the US, says Gohil Listen to This Article Foreign investors are increasingly viewing India as a distinct market rather than a subset of the broader emerging market (EM) basket, says Jitendra Gohil, chief investment strategist, Kotak Alternate Asset Managers, in an email interview with Puneet Wadhwa. Edited excerpts: How do you interpret Donald Trump's tariffs on India from a market standpoint? A 25 per cent tariff could spark some knee-jerk market reaction. The rupee might weaken further. Still, given India's limited reliance on exports, this alone is unlikely to throw its macroeconomic (macro) stability or growth prospects off course. Tariffs should also be viewed in the context of
Economic Times
29-07-2025
- Business
- Economic Times
FIIs on sidelines due to high valuations despite macro strength: Jitendra Gohil
The good news is that outflows have slowed significantly over the past year, which is a positive sign. "As a result, we expect heightened competition across sectors. More companies are entering new segments—be it wires, paints, cement, consumer durables, or FMCG. The government is making it easier to do business, and transportation costs are falling, which reduces overall business costs. Therefore, we believe earnings will face significant pressure, even though India's macro and growth story remains robust," says Jitendra Gohil, Kotak Alternate Asset. What is your recommendation? How do you view the current market setup, and what is your advice to investors? Jitendra Gohil: See, first of all, uncertainties are indeed present, and we're likely to see more of them—ranging from COVID to the Ukraine war, inflation, and recession risks. Over the past five years, we've witnessed heightened uncertainty. Yet, markets have continued to hit new highs because they respond well to fiscal and monetary expansion and accommodative policies. Globally, most large economies are on a spending spree. For example, Germany, which once championed austerity, is now discussing a major spending plan and expanding its fiscal balance sheet. Similarly, inflation remains high in developed markets, yet they're cutting rates. This shows that the greater the uncertainty, the more aggressive the policy response—governments and policymakers are doing whatever it takes to avoid slowdowns and recessions. This, in turn, fuels market when I look at India, we've adopted a more cautious approach—and rightly so. In case global markets falter or we face more turbulence, India has been building strong buffers. Corporate balance sheets are healthier, the current account deficit is narrowing, and inflation is well-controlled—in fact, it is now below Japan's inflation rate. India is charting its own course by sacrificing a bit of growth to achieve macroeconomic stability, and this is boosting confidence in India's macro fundamentals, which are much stronger than many global translating this macro stability and global uncertainty into earnings is a different matter. While the economy might do well and macro conditions remain strong, earnings growth could disappoint. Why? Because competitive intensity is increasing across almost all sectors, except perhaps airlines and parts of the auto sector. This is due to falling borrowing and capital costs, industry-leading RoAs, and all-time-high margins. As a result, we expect heightened competition across sectors. More companies are entering new segments—be it wires, paints, cement, consumer durables, or FMCG. The government is making it easier to do business, and transportation costs are falling, which reduces overall business costs. Therefore, we believe earnings will face significant pressure, even though India's macro and growth story remains robust. That's a very interesting take—earnings may disappoint, but competition is intensifying. We've already seen this in sectors like quick commerce, diagnostics, and more recently, wires, cables, and paints. The first two sectors are witnessing a bit of a stock price rebound, as investors believe that market leaders will eventually prevail. However, wires, cables, and paints are still languishing in the market. If we focus specifically on these four sectors, how should investors approach them? What will restore investor confidence? Jitendra Gohil: First, let's talk about valuations. Everything has to be priced right, and in India, the challenge is that these companies have reported extraordinarily high margins over the past five years. RoAs have improved, balance sheets are stronger, and valuations have skyrocketed. This leaves very little room for disappointment—small misses can lead to sharp corrections in stock prices. Secondly, new opportunities are emerging across sectors. Earlier, investors focused mostly on traditional bellwether sectors. Now, entirely new segments are gaining traction. For instance, defence has seen significant interest with new company listings. Similarly, waste management, water management, and even nuclear energy are opening up for private fund managers today have a much broader opportunity set. In the auto sector too, new listings are happening. In financial services, areas like depositories and asset management are seeing a spurt in IPOs and fresh capital means the competition is not just operational—it's also about attracting investor capital. Valuations in traditional sectors must come down. Going forward, we should evaluate these sectors through the lens of competitive intensity. It's not that all companies will see falling valuations—those that can acquire and turn around businesses will stand out. Investors should look for managements with these companies with cash are scouting for investments. Wherever they see RoAs of 18–20% and strong margins, they will enter, disrupting existing players. This is the trend we foresee over the next five years. So, investors must be extremely selective and careful while investing in these sectors. While you say earnings growth may disappoint—and I agree—the bigger concern is the lack of conviction among FIIs in Indian markets. FIIs base their strategies on macro indicators and sector performance, especially in key areas like banks and financials. But even there, earnings haven't been great. It's a tricky question, but when do you expect FIIs to make a strong comeback—or will it be left to DIIs to support the markets? Jitendra Gohil: There are two parts to that. First, FIIs typically evaluate macro stability. Earlier, the rupee used to depreciate by 3.5–4% annually. Now, it's down to about 1.5–2%, which means the return expectation from India is also coming down. This stability is due to both India's strong fundamentals and a weakening dollar. Second, while FIIs have sold over the past 12 months, from March to June they were net buyers, and July saw flattish activity. Their selling is not India-specific—it's part of a broader trend across emerging markets. So, India is not being singled ahead, FII holding in Indian equities has dropped to around 16–17%, possibly a multi-decade low. DIIs have surpassed them in the BSE 500. This shows growing domestic resilience. As India's economy moves from $4 trillion to $7 trillion, the market cap will also grow, deepening our key point: promoter shareholding in the BSE 500 is gradually declining, which improves free float and enhances India's weight in emerging market indices. All this builds long-term resilience. India's macros—currency, interest rates, inflation—are stable and the key issue remains valuation. Compared to other EMs, India is still very expensive. That's why FIIs are hesitant—they're on the sidelines, waiting for a correction. If we get one, and valuations turn attractive, FIIs will return. The good news is that outflows have slowed significantly over the past year, which is a positive sign.
Time of India
29-07-2025
- Business
- Time of India
FIIs on sidelines due to high valuations despite macro strength: Jitendra Gohil
"As a result, we expect heightened competition across sectors. More companies are entering new segments—be it wires, paints, cement, consumer durables, or FMCG . The government is making it easier to do business, and transportation costs are falling, which reduces overall business costs. Therefore, we believe earnings will face significant pressure, even though India's macro and growth story remains robust," says Jitendra Gohil , Kotak Alternate Asset. What is your recommendation? How do you view the current market setup , and what is your advice to investors ? Jitendra Gohil: See, first of all, uncertainties are indeed present, and we're likely to see more of them—ranging from COVID to the Ukraine war, inflation , and recession risks. Over the past five years, we've witnessed heightened uncertainty. Yet, markets have continued to hit new highs because they respond well to fiscal and monetary expansion and accommodative policies. Explore courses from Top Institutes in Please select course: Select a Course Category Others MBA Cybersecurity Data Science Data Analytics Data Science Leadership CXO Management Project Management others Artificial Intelligence Healthcare Digital Marketing Product Management Design Thinking Skills you'll gain: Duration: 16 Weeks Indian School of Business CERT-ISB Transforming HR with Analytics & AI India Starts on undefined Get Details Skills you'll gain: Duration: 9 months IIM Lucknow SEPO - IIML CHRO India Starts on undefined Get Details Skills you'll gain: Duration: 9 months IIM Lucknow SEPO - IIML CHRO India Starts on undefined Get Details Globally, most large economies are on a spending spree. For example, Germany, which once championed austerity, is now discussing a major spending plan and expanding its fiscal balance sheet. Similarly, inflation remains high in developed markets, yet they're cutting rates. This shows that the greater the uncertainty, the more aggressive the policy response—governments and policymakers are doing whatever it takes to avoid slowdowns and recessions. This, in turn, fuels market optimism. Now, when I look at India, we've adopted a more cautious approach—and rightly so. In case global markets falter or we face more turbulence, India has been building strong buffers. Corporate balance sheets are healthier, the current account deficit is narrowing, and inflation is well-controlled—in fact, it is now below Japan's inflation rate. India is charting its own course by sacrificing a bit of growth to achieve macroeconomic stability, and this is boosting confidence in India's macro fundamentals, which are much stronger than many global peers. However, translating this macro stability and global uncertainty into earnings is a different matter. While the economy might do well and macro conditions remain strong, earnings growth could disappoint. Why? Because competitive intensity is increasing across almost all sectors, except perhaps airlines and parts of the auto sector. This is due to falling borrowing and capital costs, industry-leading RoAs, and all-time-high margins. Live Events As a result, we expect heightened competition across sectors. More companies are entering new segments—be it wires, paints, cement, consumer durables, or FMCG. The government is making it easier to do business, and transportation costs are falling, which reduces overall business costs. Therefore, we believe earnings will face significant pressure, even though India's macro and growth story remains robust. That's a very interesting take—earnings may disappoint, but competition is intensifying. We've already seen this in sectors like quick commerce, diagnostics, and more recently, wires, cables, and paints. The first two sectors are witnessing a bit of a stock price rebound, as investors believe that market leaders will eventually prevail. However, wires, cables, and paints are still languishing in the market. If we focus specifically on these four sectors, how should investors approach them? What will restore investor confidence? Jitendra Gohil: First, let's talk about valuations. Everything has to be priced right, and in India, the challenge is that these companies have reported extraordinarily high margins over the past five years. RoAs have improved, balance sheets are stronger, and valuations have skyrocketed. This leaves very little room for disappointment—small misses can lead to sharp corrections in stock prices. Secondly, new opportunities are emerging across sectors. Earlier, investors focused mostly on traditional bellwether sectors. Now, entirely new segments are gaining traction. For instance, defence has seen significant interest with new company listings. Similarly, waste management, water management, and even nuclear energy are opening up for private participation. So, fund managers today have a much broader opportunity set. In the auto sector too, new listings are happening. In financial services, areas like depositories and asset management are seeing a spurt in IPOs and fresh capital activity. This means the competition is not just operational—it's also about attracting investor capital. Valuations in traditional sectors must come down. Going forward, we should evaluate these sectors through the lens of competitive intensity. It's not that all companies will see falling valuations—those that can acquire and turn around businesses will stand out. Investors should look for managements with these capabilities. Large companies with cash are scouting for investments. Wherever they see RoAs of 18–20% and strong margins, they will enter, disrupting existing players. This is the trend we foresee over the next five years. So, investors must be extremely selective and careful while investing in these sectors. While you say earnings growth may disappoint—and I agree—the bigger concern is the lack of conviction among FIIs in Indian markets. FIIs base their strategies on macro indicators and sector performance, especially in key areas like banks and financials. But even there, earnings haven't been great. It's a tricky question, but when do you expect FIIs to make a strong comeback—or will it be left to DIIs to support the markets? Jitendra Gohil: There are two parts to that. First, FIIs typically evaluate macro stability. Earlier, the rupee used to depreciate by 3.5–4% annually. Now, it's down to about 1.5–2%, which means the return expectation from India is also coming down. This stability is due to both India's strong fundamentals and a weakening dollar. Second, while FIIs have sold over the past 12 months, from March to June they were net buyers, and July saw flattish activity. Their selling is not India-specific—it's part of a broader trend across emerging markets. So, India is not being singled out. Looking ahead, FII holding in Indian equities has dropped to around 16–17%, possibly a multi-decade low. DIIs have surpassed them in the BSE 500. This shows growing domestic resilience. As India's economy moves from $4 trillion to $7 trillion, the market cap will also grow, deepening our markets. Another key point: promoter shareholding in the BSE 500 is gradually declining, which improves free float and enhances India's weight in emerging market indices. All this builds long-term resilience. India's macros—currency, interest rates, inflation—are stable and comforting. But the key issue remains valuation. Compared to other EMs, India is still very expensive. That's why FIIs are hesitant—they're on the sidelines, waiting for a correction. If we get one, and valuations turn attractive, FIIs will return. The good news is that outflows have slowed significantly over the past year, which is a positive sign.
