Given the uncertainty right now, we might get a slightly clearer picture on Friday and then at the end of this month when a meeting potentially takes place between Dr S Jaishankar and Russia. How should an investor navigate the volatility that we are seeing at present.
Siddhartha Khemka: Two different pictures are emerging from the market perspective. First is the earnings picture. Only a few more days are left of the Q1 earning season and more or less, we have seen a good set of inline numbers. We have got 8-9% earnings growth compared to a 6-7% earnings growth expectation. So, broadly, there is no negative coming out from there. If at all, some of the sectors and domestic focused segments have given a strong outlook going forward, that should be positive.
The second picture is on the global front where geopolitical things are heating up initially from a friendly and almost on the verge of signing the trade agreement with the US, to a situation where things have become much worse. We are among the highest tax slabs of 50%. But again, several meetings are lined up between the US president and the Russian president. India on its part has steered up a lot of meetings globally. So, a lot of development, news flows will come from the global front.
We expect that things could only improve from here on. It is difficult to say whether things will go bad from here but there is hope that there will be some negotiation between the US and Russia and that could lead to removal of the secondary level tariffs which had been imposed specifically only on India compared to all the other importers.
So, things will become clearer once these meetings take place. Nonetheless, as you asked what investors should do, in this volatile time, it is better to stick to some of the domestic names. There are several segments that we like. We have seen interest rates coming down sharply from the start of the year. RBI through its various measures including the repo rate cut, the CRR cut and other lot of other provisionings has injected more than Rs 8 lakh crore of liquidity into the system and we expect that to start showing up in the entire corporate earnings demand push up by the second half of the financial year. So, Q3 and Q4 should see a big impact.
Financials, and the domestic consumption theme should do well. Monsoon has been good. Inflation is at an eight-year low and that is very conducive. So far, some of these domestic financials, consumption-driven companies, and FMCGs could do well in the next two quarters. We have seen that after FY25 with its lacklustre government capex, FY26 has started on a strong note. The government capex has been frontloaded in FY26 and that has led to strong demand for infra companies, for cement companies, and that is again a domestic theme but coming off with strong execution and better numbers.Since you spoke about a whole host of sectors that you are bullish on, is there any sector that you are completely staying away from at this juncture, especially after the kind of numbers that they have reported?
Siddhartha Khemka: One sector which we are a little bit averse to right now is the IT sector and from a near-term perspective because things are very uncertain and the numbers and the downgrade in terms of earnings outlook for FY26 does not leave any triggers for IT companies. Hence, I would suggest avoiding IT for the next two-three quarters. We will get enough time in the coming quarters for long-term investors to accumulate them.