Speaking to ET Now, Srinivas Rao Ravuri, CIO, Bajaj Life said such phases are not new to markets — but this one may carry more weight than recent corrections.
“Yes, it has been a tough day, but we have seen such days in the past also. I have been in market for now for 30 years… Right now, it appears to be more serious than what we saw in the recent past.”
He pointed out that while markets have bounced back quickly over the last three to four years, the current setup combines weak sentiment with soft earnings.
“We have just completed the third quarter earnings, even that was not so great. We have seen actually earnings downgrade… A mix of weak sentiment followed by not so great earnings growth is what is impacting markets.”
However, Ravuri remains measured on valuations.
“When I am seeing valuations at 19 times one year forward, are they compelling? Answer is no. But are they comfortable? Definitely answer is yes.”Domestic-Focused Sectors in Favour
Ravuri stressed that India is not alone in facing pressure, as global equities have also corrected.
“It is not India alone, overall equity markets are down. So, it is a relative world.”
Given tariff-related uncertainties and global headwinds, his portfolio positioning remains tilted toward domestic growth themes.
“Our preference… is more towards sectors dependent on domestic growth… consumer discretionary, autos, pharma would be our top overweights at this point of time.”
Defence Rally: Structural Story, Valuation Caution
Defence counters such as Bharat Electronics Limited and Bharat Dynamics Limited saw heightened activity amid expectations of higher defence spending.
Ravuri acknowledged the structural opportunity.
“Every country will spend more on defence than what they have spent in the last 5, 10, 15 years… We will buy more Indian than what we used to do in the past.”
But he warned that valuations are stretched. “Many of these companies are trading at… more than 50-60 price to earnings… At that price the margin of safety is definitely much lower.”
He added that high multiples demand strong visibility. “When you are paying 40-50 PE, you are expecting 25-30% earnings growth for next three-four years… otherwise I will not recommend buying in a day like this.”
Oil and Tactical Opportunities
Upstream oil companies such as Oil and Natural Gas Corporation have held up better as crude prices firmed.
“If you are producing oil… as the prices are moving up… they will see a natural uptick in their revenues and profitability.”
Ravuri indicated that while tactical plays are possible, valuations and earnings trajectory remain central to stock selection.
“What matters most is A) earnings growth and B) trajectory of those earnings growth… Upstream, you have valuation on your side and also there is a possible uptick in earnings.”
The Road Ahead
With valuations near 19 times forward earnings, the market may not be cheap — but neither is it overheated. Much will depend on how geopolitical tensions evolve and whether earnings stabilise in the coming quarters.