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Hans India
8 hours ago
- Business
- Hans India
Indian equities outperform global markets in May: Report
Mumbai: The Indian stock markets continued their upward journey in May, supported by a strong economic backdrop and broad-based buying across sectors, a new report said on Tuesday. The Indian equities outperformed several global peers, particularly in the mid- and small-cap segments, driven by solid macro fundamentals and improving investor sentiment, according to PL Asset Management's latest report. Siddharth Vora, Head of Quant Investment Strategies at PL Asset Management, said India's solid economic fundamentals and improved global sentiment offer a positive environment for investors. 'India's resilient macroeconomic landscape, coupled with improving global sentiment, presents a constructive backdrop for equity investors,' Vora added. While the Nifty rose 1.7 per cent to close near the 24,800 mark, mid- and small-cap indices recorded sharper gains. The Nifty Midcap 150 jumped 6.5 per cent and the Smallcap 250 surged by an impressive 9.5 per cent. This strong performance was backed by cyclical sectors like defence, metals and public sector banks, as well as increased retail investor participation. The report noted that India's macro indicators remained healthy, with steady tax collections, easing inflation, robust Purchasing Managers' Index (PMI) data, and rising foreign exchange reserves. These factors helped build confidence among both domestic and foreign investors. The broader market also showed encouraging signs of recovery. The Nifty 500 rose 3.5 per cent, while the Nifty 500 Equal Weight Index outperformed significantly with an 8.5 per cent jump. This suggests that gains were more evenly spread across stocks, rather than being limited to a few large players. Valuations have risen with this rally. The Nifty's price-to-earnings (PE) ratio climbed to 22.3 times, while the price-to-book (PB) ratio stood at 3.6 times. Though mid- and small-cap valuations remain above their five-year averages, PL noted they are still within reasonable one-year bands -- indicating normalisation rather than overheating. In terms of investment styles, quality, momentum, and high-beta stocks were the top performers in May. The Nifty 500 Equal Weight Index gained 8.5 per cent, outperforming the market-cap weighted index. High-beta and momentum strategies rose 8 per cent and 5 per cent respectively, supported by sectoral rotation and improving sentiment. Quality stocks also saw strong interest, gaining 8.5 per cent on the back of good earnings and safe-haven appeal, the report stated.
Economic Times
2 days ago
- Business
- Economic Times
Good news getting priced in faster, narrow range consolidation likely in medium term: Siddharth Vora
Siddharth Vora, Executive Director, PL Asset Management, says after a sharp three-month rally, the Indian market may experience profit booking or consolidation due to priced-in good news and limited valuation headroom. While cautious in the near term, medium-term prospects remain healthy with favorable market conditions. IT and metals sectors are performing well, and capital markets offer long-term growth potential. ADVERTISEMENT How should one look at the market? Should one look at the positive side that yes, India GDP is doing good, the rate cuts are easing off, even the CPI number is quite favourable or look at the other side which is geopolitical uncertainty still persist and add to that is the recent move in the crude oil prices. How do you see the markets? Siddharth Vora: The right perspective to look at the market is that there are multiple positives from the macro front whether it is rate cuts, inflation, strong growth, we need to look at it from the perspective that we are coming out of a sharp rally over the last three months. So, in my opinion, a lot of good news is already priced in and one needs to be a little cautious from here on given we do not have too much valuation headroom in India anyways. Rs 13 lakh crore boom, but Q4 sends a wake-up call to smallcap investors We were always an expensive market. We corrected a bit and now we are back to an expensive market. So, all the good news is actually known by everyone, bulk of it is also priced in. In the near term, we could see some sort of profit booking or consolidation coming out of the strong rally and the lack of fresh upside triggers in the near term. So, in the near term, we could see a marginally corrective market, but again that is a very short-term view. From a medium-term, we do believe that quantitatively we are in very healthy, favourable, and stable market conditions. All other sentiment indicators have been positive. We flagged off a market recovery outlook early like first week March, last week Feb, and that has played out really fast. We thought it would play out over 6-12 months, but it has played out over two-three months itself. So, yes, the good news is getting priced in faster and that is a good sign from the market, could see some narrow range consolidation in the medium term. ADVERTISEMENT Earlier, you had mentioned that you had exited from the consumer discretionary pack. You had exited travel and tourism and were looking at themes like alcohol. Now, there is news about an increase in excise duty. The entire space is subjected to government policies. How are you looking at it right now? The other pack is IT, which is seeing a rerating. That is the only sector that is holding the fort in a market like this. Siddharth Vora: From an IT perspective, even in my last chat with you, I had said that it is a tail risk play in our portfolio. We have had a 12-13% allocation for the last two-three months, despite all the globally negative cues, US risks, we still had IT because of its free cash generating nature and comfortable valuations on the largecap side, traditionally giving a low volatility defensive exposure to the portfolio. From a volatility, quality, and valuation perspective, IT was fitting right in the quant strategy and therefore we have maintained our allocation and it is doing really well now. Where the rest of the market is seeing some sort of profit booking and correction, it is playing out the tail risk play, global play. So, both IT and metals are playing out well for us. They were contra positions at some point, but now they are turning favourable in the current markets cycle. ADVERTISEMENT Coming to alcohol, we have only had one name in our portfolio for the last five-six months now – Radico. It has done really well for us so far and despite everything, we continue to maintain a 2-2.5% allocation to Radico and we will stick to our position till we see any major development from a quantitative perspective. Fundamental triggers can keep changing, but quantitatively from a factor standpoint, Radico continues to hold strong across multiple factors. What is your view on some of the capital market plays because last month specifically, there has been no stopping in most of these counters. How long can this run-up continue and what factors do you believe are at play for this? Siddharth Vora: In our portfolio, we have a significant allocation to the entire capital markets play. It has contributed to our alpha for the month of May and June as well so far across the board right whether it is asset management companies, broking companies, some other platform companies, exchanges, or other capital market ancillaries, most of them have done well and we continue to hold this story. ADVERTISEMENT Within our financial allocation, it is lenders, capital markets, and insurance, these are the three broad pockets we have allocated and within this capital markets holds the relatively higher allocation and from a quantitative perspective, we believe we are well positioned to ride the wave in capital markets. It is a structural story, but we are not structural participants. We will stay in the story till quantitative triggers stay intact. The moment that changes, we will be out of the story. I can give you a fundamental view that for three-five years, this is a great area with visible growth, valuations are rich, cash generation is very good, but I know for a fact that if the market structure were to change, if there was excessive volatility, we would be the first ones to be out of the sector as right perspective to look at the market is that there are multiple positives from the macro front whether it is rate cuts, inflation, strong growth, we need to look at it from the perspective that we are coming out of a sharp rally over the last three months. So, in my opinion, a lot of good news is already priced in and one needs to be a little cautious from here on given we do not have too much valuation headroom in India anyways. ADVERTISEMENT We were always an expensive market. We corrected a bit and now we are back to an expensive market. So, all the good news is actually known by everyone, bulk of it is also priced in. In the near term, we could see some sort of profit booking or consolidation coming out of the strong rally and the lack of fresh upside triggers in the near term. So, in the near term, we could see a marginally corrective market, but again that is a very short-term view. From a medium-term, we do believe that quantitatively we are in very healthy, favourable, and stable market conditions. All other sentiment indicators have been positive. We flagged off a market recovery outlook early like first week March, last week Feb, and that has played out really fast. We thought it would play out over 6-12 months, but it has played out over two-three months itself. So, yes, the good news is getting priced in faster and that is a good sign from the market, could see some narrow range consolidation in the medium IT and metals are playing out well for us. They were contra positions at some point, but now they are turning favourable in the current markets cycle. From a fundamental view, for three-five years, capital market play is a great area with visible growth, valuations are rich, cash generation is very good, but I know for a fact that if the market structure were to change, if there was excessive volatility, we would be the first ones to be out of the sector as well. (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
15-05-2025
- Business
- Time of India
Siddharth Vora banks on largecaps, avoids smallcaps amid market uncertainty
"Valuation premiums could contract for India in the near to medium term and given that we do not have much upside room in terms of valuation left, we could be in a very narrow range market," says Siddharth Vora , PL Asset Management. Help us understand how are you placing your bets in this market because it was just when we started, the FIIs making a comeback in the Indian markets , but then we have the geopolitical tensions coming back, the China deal being announced, do you believe that the FIIs are here to stay or there could be some way out? Siddharth Vora: I would see both of these events as a negative event in the near to medium-term for India. So, everything that worked for us whether it was falling crude, weakening DXY, FIIs coming in, China being out of the race for some time and India being in pole position in terms of global flows and global growth and India being the only geopolitically safe, secured large economy, all of these things are now unwinding in the other side. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Kedungpane: Beautiful New Senior Apartments with Two Bedrooms Senior Apartments | Search Ads Search Now Undo Crude is rising, dollar is strengthening again, US bond yields are rising, the US-China trade deal is not so good for India at least sentimentally and from a flows perspective, and the recent geopolitical stress has also taken out some shine from India. Valuation premiums could contract for India in the near to medium term and given that we do not have much upside room in terms of valuation left, we could be in a very narrow range market. So, it would be tough to find meaningful upside of 12%, 15%, 20% in Indian markets. There would be single-digit upside in Indian markets from here on given the way narratives have changed over the last, I would say, 10 days. Live Events The fact that single-digit return is something that one should expect, but which particular basket should one look at because in the largecaps which are the safer heavens, do you believe that one should place their bets there or maybe the SMIDs are offering more good opportunities at this point in time? Siddharth Vora: Smallcap allocation is significantly underweight. We barely have any smallcap allocation. It would be under 10%, 50% to 55% is largecap, and the balance is midcaps. Our portfolios currently biased towards large and midcap. There is better valuation comfort, better resilience amidst all the chaos and chaos is the new normal in Indian markets and global markets, the way things are panning out with pandemics, wars, trade wars, lot of things are changing, so chaos is here to stay. So, we have positioned our portfolio defensively in terms of size, but aggressively in terms of sectors, that is how we have brought in the beta. We have positioned into high beta sectors like lenders, like capital market plays, like metals, some high beta domestic consumption plays, and some defence as well, that is the broad positioning of the portfolio. We also have our global exposures to it and metals to see the global rebound playing out in the markets and we have been positioned in that since roughly two, two-and-a-half months. So, hopefully that position should recover well like it is right now. And yes, I think that is the broad positioning, large and mid and balance between domestic and global plays because you cannot take either sides in a market like this where there is so much uncertainty. One more thing that I want to bring to your attention is the fact that with this entire Trump and China saga playing out on the tariffs, now that the tariffs have eased up, is India likely to lose a certain relative advantage that we had over China, will that start ebbing away as far as the foreign inflows are concerned? Siddharth Vora: If I look at Indian market seven days back, we were the only large market which was growing fast, had domestic macros, which had interest rates coming down, inflation under control, zero geopolitical stress and our biggest large EM competitor which was China that had lost a major advantage. So, from a relative perspective, India was in pole position and the strongest placed global market. Now, two of the advantages that were playing for us are actually going against us and therefore, from a foreign capital flow this is not such a great moment for India at least in the near to medium term till this is discounted either with a price correction or with a time correction. We have lost pole positioning right now. What is your advice, where are you finding some signals of caution for the investors where they should actually look into their investments, the sectors are not expected to perform well given the fact that one should stay cautious is the advice coming from you? Siddharth Vora: I would say stay cautious, stay invested, and just position the portfolio to the current market environment. We also have meaningful allocations to defence, like 5% of our portfolio is defence, another 10% is absolutely defensive, financials within the insurance space or the regulator space. So, we have defensive positioning within aggressive sectors also and other than that having so, we have Bharti Airtel as well in our portfolio, continues to be a large and long holding for us and it has done very well in all the chaos in the market because it is neither affected by geopolitical stress nor is it affected by global tariffs. So, this is just an example not a recommendation. This is just to say that in every market condition you will find some themes and some ideas which will position well given the market circumstances. For now, a name like Bharti Airtel or HDFC Life is very well positioned despite all the global and local chaos. So, we have to find those ideas and be aware of signals turning against us, like crude, like dollar, potentially foreign inflows as well. We need to be aware, we need to be vigilant, and we need to keep realigning the portfolio to deal with the changing market conditions. Also, you mentioned that you are well positioned in domestic consumption. Now which part of consumption do you see value, in the discretionary end of it because if you look at the discretionary end of it whether it is the travel tourism sector, the airlines, these themes have already played out quite a bit right now? Siddharth Vora: So, we have exited fortunately our entire travel and tourism exposure roughly 20-25 days back and we are quite happy with that exit because valuations leave again little room for the upside and now, of course, there is a new trigger of uncertainty. We will never know when it is over. We might be on the edge for some more time. How much ever a ceasefire is announced, we have seen ceasefires being breached whether it is Israel or whether it is Russia-Ukraine ceasefires do get breached time and again. So, currently, it is probably a better space to avoid rather than hold in my opinion. But we are positioned on the discretionary side rather than the staple side, within the consumer buckets. We are liking themes like alcohol as in particular we have been well positioned there. Just intrigued to know what made you take your positions out of the hotel and the hospitality space because given the fact that yes, of course, by the last month towards the end, there was this Pahalgam attack that did happen, but the markets were on the roar indeed. Siddharth Vora: I know the markets were doing well, but no, so we follow a quantitative model. So, when quantitative factors turn adverse, whether the value factor is turning adverse, the volatility factors turning adverse, or other sectors of stocks are showing better strength, it is a combination or interaction of multiple factors which decide which are the top stocks to be held in a given market condition. So, based on that, we have moved out of hotels and airlines.
