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Economic Times
6 days ago
- Business
- Economic Times
Earnings biggest overhang on the market, don't chase recent outperformers: Jimeet Modi
Agencies Multi-Asset Allocation Funds offer a structured and efficient way to achieve this. They provide a disciplined approach to diversification and help retail investors build long-term risk-adjusted wealth. While singling out earnings as the biggest overhang on the market right now, Jimeet Modi, Founder & CEO, SAMCO Group, said valuations have run ahead of reality. "One key mistake retail investors are making today is chasing recent outperformers in the mid- and small-cap space, driven by recency bias. This often leads to overexposure and heightened portfolio risk,' Modi said. Edited excerpts from a chat: The market seems to be in a consolidation mode with downward bias. Is earnings the biggest headache for the market right now? Yes, earnings are clearly the biggest overhang on the market right now. Valuations have run ahead of reality, and with global liquidity tight, investors are no longer rewarding potential — they want performance. The market's downward bias reflects this disappointment. Growth in a few sectors isn't enough to offset weak commentary in IT, realty, and global-facing names. The market is consolidating because it's waiting for clarity and earnings are the filter. This is not panic, it's accountability. For investors, this is the time to separate hype from fundamentals. Stay focused on quality, execution, and margin trends. In markets like these, discipline is your edge, and patience, your biggest is your reading of the Q1 earnings season so far? Why do you think that the recovery that was expected in Q1 is gradually being pushed to Q2? The earnings of Q1 FY26 were underwhelming versus expectations. Sectors like BFSI, auto, and capital goods have shown resilience, broader earnings lacked momentum. The recovery expected in Q1 is now deferred to Q2—not due to structural weakness, but timing pressures played their part. Global demand remains soft, hitting export-oriented sectors like IT, pharma, and textiles. Geopolitical tensions and policy uncertainty dampened capital flows and margin stability across segments signals underlying resilience. As festive demand, inventory normalization, and capex revival take shape, Q2 could bring better visibility. For now, the market is seeking evidence before rewarding growth again. Do you think that earnings are likely to see strong recovery from H2 onwards, given festive demand, impact of rate cuts, tax relief and low base effect? Earnings are likely to see a meaningful recovery in H2, driven by multiple supportive factors. The festive season should boost consumer demand across discretionary and FMCG segments. Additionally, the anticipated rate cuts and recently announced tax relief measures are expected to improve consumption and corporate margins. A favorable base effect from last year's subdued performance is likely to further enhance year-on-year growth visibility. Overall, the macro tailwinds and improved sentiment create a strong setup for earnings momentum to accelerate in the second half of the fiscal year. If you had Rs 10 lakh to invest in the market right now, how would you spread it across gold/silver, equities and debt? Asset allocation drives long-term returns more effectively than stock picking. With ₹10 lakh to invest, a 60-25-15 strategy balances growth and stability. I'd allocate 60% to equities - split into 30% large caps for valuation comfort and defensive strength, 15% mid-caps and 15% small caps to capture high-growth potential. Large caps offer resilience amid inflation and rate cycles. 25% in debt mutual funds cushions volatility, given its low correlation with equities. The remaining 15% goes to precious metals—10% silver and 5% gold—based on silver's industrial demand and a favorable gold-silver ratio. The IT sector has been the biggest loser in 2025 and many stocks are now facing their worst phase since the 2008 crisis. Do you think that more pain is in the offing or valuations have become cheaper now? The Indian IT sector faced a tough first half of 2025, with the Nifty IT index down 24% YTD and its P/E at 25.5x, just above its ten-year average of 24x. Early Q1 earnings held up, but weak US tech budgets and new tariffs cloud the near-term outlook. Industry wide, we expect decent revenue growth in the future, yet stagnant share prices could drive P/Es lower. Still, India's IT firms benefit from lower operating costs and a large, skilled workforce. These structural advantages should support a gradual recovery in H2 2025, making current levels a selective entry point for long-term investors in top-quality IT names. The recovery that we saw in small caps petered out in July, along with selling pressure in blue chips. At a broader segment level, do you think smallcaps are giving buy signals once again? Q4 FY25 earnings came in below expectations, with broad-based profit pressures across the segment. This reinforces the need for caution, even as valuations have moderated post the July correction. The recent dip has reset market expectations, creating a more favourable entry point for sound companies. With India's structural growth drivers intact and domestic liquidity remaining robust, smallcaps could see improved traction in H2 FY26. While near-term volatility and external headwinds may persist, this phase offers a window to gradually accumulate quality businesses with resilient models and clear earnings visibility. What's the one big mistake you think retail investors are making right now and one contrarian idea you'd back for the next 12 months? Diversification into non correlated assets is the best approach. One key mistake retail investors are making today is chasing recent outperformers in the mid- and small-cap space, driven by recency bias. This often leads to overexposure and heightened portfolio risk. A contrarian idea I would back for the next 12 months is to diversify meaningfully across non-correlated assets such as debt, gold, silver, or even U.S. equities to manage volatility and preserve capital. Multi-Asset Allocation Funds offer a structured and efficient way to achieve this. They provide a disciplined approach to diversification and help retail investors build long-term risk-adjusted wealth.
Time of India
6 days ago
- Business
- Time of India
Earnings biggest overhang on the market, don't chase recent outperformers: Jimeet Modi
While singling out earnings as the biggest overhang on the market right now, Jimeet Modi , Founder & CEO, SAMCO Group , said valuations have run ahead of reality. "One key mistake retail investors are making today is chasing recent outperformers in the mid- and small-cap space, driven by recency bias. This often leads to overexposure and heightened portfolio risk,' Modi said. 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Valuations have run ahead of reality, and with global liquidity tight, investors are no longer rewarding potential — they want performance. The market's downward bias reflects this disappointment. Live Events Growth in a few sectors isn't enough to offset weak commentary in IT, realty, and global-facing names. The market is consolidating because it's waiting for clarity and earnings are the filter. This is not panic, it's accountability. For investors, this is the time to separate hype from fundamentals. Stay focused on quality, execution, and margin trends. In markets like these, discipline is your edge, and patience, your biggest profit-maker. What is your reading of the Q1 earnings season so far? Why do you think that the recovery that was expected in Q1 is gradually being pushed to Q2? The earnings of Q1 FY26 were underwhelming versus expectations. Sectors like BFSI , auto, and capital goods have shown resilience, broader earnings lacked momentum. The recovery expected in Q1 is now deferred to Q2—not due to structural weakness, but timing mismatches. External pressures played their part. Global demand remains soft, hitting export-oriented sectors like IT, pharma, and textiles. Geopolitical tensions and policy uncertainty dampened capital flows and sentiment. Yet, margin stability across segments signals underlying resilience. As festive demand, inventory normalization, and capex revival take shape, Q2 could bring better visibility. For now, the market is seeking evidence before rewarding growth again. Do you think that earnings are likely to see strong recovery from H2 onwards, given festive demand, impact of rate cuts, tax relief and low base effect? Earnings are likely to see a meaningful recovery in H2, driven by multiple supportive factors. The festive season should boost consumer demand across discretionary and FMCG segments. Additionally, the anticipated rate cuts and recently announced tax relief measures are expected to improve consumption and corporate margins. A favorable base effect from last year's subdued performance is likely to further enhance year-on-year growth visibility. Overall, the macro tailwinds and improved sentiment create a strong setup for earnings momentum to accelerate in the second half of the fiscal year. If you had Rs 10 lakh to invest in the market right now, how would you spread it across gold/silver, equities and debt? Asset allocation drives long-term returns more effectively than stock picking. With ₹10 lakh to invest, a 60-25-15 strategy balances growth and stability. I'd allocate 60% to equities - split into 30% large caps for valuation comfort and defensive strength, 15% mid-caps and 15% small caps to capture high-growth potential. Large caps offer resilience amid inflation and rate cycles. 25% in debt mutual funds cushions volatility, given its low correlation with equities. The remaining 15% goes to precious metals—10% silver and 5% gold—based on silver's industrial demand and a favorable gold-silver ratio. The IT sector has been the biggest loser in 2025 and many stocks are now facing their worst phase since the 2008 crisis. Do you think that more pain is in the offing or valuations have become cheaper now? The Indian IT sector faced a tough first half of 2025, with the Nifty IT index down 24% YTD and its P/E at 25.5x, just above its ten-year average of 24x. Early Q1 earnings held up, but weak US tech budgets and new tariffs cloud the near-term outlook. Industry wide, we expect decent revenue growth in the future, yet stagnant share prices could drive P/Es lower. Still, India's IT firms benefit from lower operating costs and a large, skilled workforce. These structural advantages should support a gradual recovery in H2 2025, making current levels a selective entry point for long-term investors in top-quality IT names. The recovery that we saw in small caps petered out in July, along with selling pressure in blue chips. At a broader segment level, do you think smallcaps are giving buy signals once again? Q4 FY25 earnings came in below expectations, with broad-based profit pressures across the segment. This reinforces the need for caution, even as valuations have moderated post the July correction. The recent dip has reset market expectations, creating a more favourable entry point for sound companies. With India's structural growth drivers intact and domestic liquidity remaining robust, smallcaps could see improved traction in H2 FY26. While near-term volatility and external headwinds may persist, this phase offers a window to gradually accumulate quality businesses with resilient models and clear earnings visibility. What's the one big mistake you think retail investors are making right now and one contrarian idea you'd back for the next 12 months? Diversification into non correlated assets is the best approach. One key mistake retail investors are making today is chasing recent outperformers in the mid- and small-cap space, driven by recency bias. This often leads to overexposure and heightened portfolio risk. A contrarian idea I would back for the next 12 months is to diversify meaningfully across non-correlated assets such as debt, gold, silver, or even U.S. equities to manage volatility and preserve capital. Multi-Asset Allocation Funds offer a structured and efficient way to achieve this. They provide a disciplined approach to diversification and help retail investors build long-term risk-adjusted wealth.
Mint
09-06-2025
- Business
- Mint
Sensex, Nifty 50 rise for 4th consecutive session; investors earn ₹4 lakh crore— 10 key highlights
Indian stock market extended gains to the fourth consecutive session on Monday, June 9, on across-the-board buying amid largely positive global cues. The Sensex closed 256 points, or 0.31 per cent, higher at 82,445.21, while the Nifty 50 settled at 25,103.20, up 100 points, or 0.40 per cent. The mid and small-cap segments outperformed as the BSE Midcap and Smallcap indices rose 1.03 per cent and 1.19 per cent, respectively. The overall market capitalisation of BSE-listed firms rose to ₹ 455 lakh crore from ₹ 451 lakh crore in the previous session, making investors richer by about ₹ 4 lakh crore in a day. In the last four sessions, the Sensex and the Nifty 50 have jumped more than 2 per cent each, and investors have got richer by about ₹ 12 lakh crore. The recent rally in the market has followed healthy domestic macro prints, better-than-expected Q4 results and the RBI's bumper 50 bps rate cut. Positive global cues amid expectations that the US-China and US-India trade deals were near also influenced market sentiment. "The Indian stock market has been experiencing strength recently, backed by positive economic growth and better-than-expected fourth-quarter results. We could see a positive structure for the indices playing out, considering the liquidity in the capital markets continues to be fairly buoyant and the continuation of steady growth in the Indian economy," Jimeet Modi, founder and CEO of SAMCO Group, told Mint. 39 stocks ended higher in the Nifty 50 index, out of which Jio Financial Services (up 3.89 per cent), Kotak Mahindra Bank (up 3.25 per cent) and Bajaj Finance (up 2.69 per cent) ended as the top gainers. Shares of Eternal (down 1.86 per cent), ICICI Bank (down 1.73 per cent) and Titan Company (down 0.73 per cent) closed as the top losers in the index. (This is a developing story. Please check back for fresh updates.) Read all market-related news here Read more stories by Nishant Kumar Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.
Mint
09-06-2025
- Business
- Mint
Expert view: Indian stock market momentum may continue; stick to domestic themes, says Jimeet Modi of SAMCO Group
Expert view: Jimeet Modi, founder and CEO of SAMCO Group, is positive about the Indian stock market due to economic growth and better-than-expected quarterly results. In an interview with Mint, Modi said the indigenisation process and liquidity measures undertaken by the regulators will bode well for the defence and financial sectors. Here are edited excerpts of the interview: The Indian stock market has been experiencing strength recently, backed by positive economic growth and better-than-expected fourth-quarter results. We could see a positive structure for the indices playing out, considering the liquidity in the capital markets continues to be fairly buoyant and the continuation of steady growth in the Indian economy. Sector rotation tends to be a perpetual action in every phase of a market cycle. The liquidity seems to be positioning towards market segments like defence and financials in this leg of the up move. The indigenisation process and liquidity measures undertaken by the regulators will bode well for the defence and financial sectors, respectively. In the current market scenario, portfolio positioning has to be a function of both underlying growth and relative attractiveness in valuation. We are in an ambivalent market environment that requires the right balance between different styles to ensure an optimum portfolio that ensures effective risk management and return generation. The recent decision to implement a third consecutive rate cut this year, with a fifty basis point reduction instead of the anticipated twenty-five basis points, is a positive and strategic move. This action reflects an intentional frontloading of rate cuts, supported by the country's consistent economic performance and easing inflationary pressures. The shift in the policy stance from accommodative to neutral is a prudent adjustment, as it provides the necessary flexibility to balance fostering growth in light of ongoing geopolitical uncertainties. The current policy measures are designed to enhance consumer spending, spur domestic economic activity, and maintain adequate liquidity amidst the complex global challenges. A combination of fiscal and monetary measures leading to robust liquidity in the system would bode well for the economy and the financial markets. The aggressive nationalist measures enforced by the Trump administration led to foreign investors' impulsive withdrawal of capital from the United States. However, a multitude of measures, such as Tariff wars and the US government's onshoring of manufacturing, would hurt the profitability of companies in the USA and, in turn, have a structural effect on the country's financial markets. This would lead to foreign money flowing into other markets, especially emerging markets like India, where growth visibility and the structure of the economy are positively evolving. This process would be gradual in nature and will start reflecting in the numbers in the long run. On a broader theme basis, it would be prudent for domestic investors to stick to domestic-led themes in their portfolio, which would ensure alignment with stable growth visible in the Indian Economy. As far as the export-led market segments are concerned, select pockets of growth could be attractive on a case-by-case basis. However, a sharp slowdown in some of the developed markets could dampen growth in the medium term for the export-oriented segments. Momentum is an investment strategy that focuses on the idea that assets that have performed well in the past will continue to perform well in the future. This strategy is backed by the hypothesis that trends tend to persist over time due to factors like market sentiment, investor behaviour, and economic forces. We at Samco Mutual Fund are harnessing the power of this strategy to construct portfolios backed by quantitative and behavioural market data. Our strategy is built on a data-driven approach that filters out underperforming market segments and focuses on those with sustained positive momentum. We use advanced proprietary algorithms which consider price movements, volume shifts, money flows, sectoral data and other key market behaviour indicators to construct a differentiated portfolio for investors across market segments and themes. Read all market-related news here Read more stories by Nishant Kumar Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.
