Edited excerpts from a chat:
How do you view the overall market setup as we approach Samvat 2082, especially after a year of consolidation and global volatility? What kind of portfolio reset would you advise investors at this juncture to balance risk and reward effectively?
After a year of consolidation amid global volatility, the market setup now looks balanced. Large-cap valuations have normalised, with the Nifty trading at ~20x one year forward P/E, in line with historical averages, while mid-cap at ~26x one year forward P/E is less expensive compared to a year ago.
The earnings downgrade cycle appears largely over, with improving domestic fundamentals providing a more stable outlook. Going forward, the next market move will depend on external triggers, particularly developments related to the US tariff policies on India, where a resolution could boost sentiment and drive markets higher. With this backdrop, investors should adopt a multi-cap strategy—maintaining a core allocation to largecaps for stability and fair valuations, while taking selective midcap exposure where earnings visibility and recovery prospects are strong. Diversification across sectors remains key to balancing risks and capturing growth opportunities across the economy.
In the context of Samvat 2082, what are the key themes or sectors you believe will drive alpha generation over the next 12–18 months?
After a period of subdued growth, the domestic economy is showing early and broad-based signs of recovery, supported by a coordinated mix of fiscal and monetary policy measures. On the fiscal side, the government has implemented GST reforms to improve compliance and streamline supply chains, along with income tax cuts and targeted subsidies to enhance disposable income and boost consumption.
On the monetary side, the RBI has taken a proactive stance, cutting benchmark interest rates by 100 bps in 1HCY25, injecting liquidity through open market operations, targeted long-term repo operations, and lowering risk weights for certain asset classes to improve banks’ lending capacity. These steps are beginning to yield results — loan growth has accelerated, particularly in retail and MSME segments, with system-wide credit growth now exceeding 10% which is likely to reach 12–13% by FY26.
Asset quality is stabilising, NPAs are trending lower, and the five-quarter-long EPS downgrade cycle appears to be bottoming out. The recovery, which initially centred on premium consumption, is now expanding across mass-market demand and domestic-facing sectors such as banking, autos, and consumer durables, while also showing up in select export-oriented industries. Overall, these trends suggest a sustained economic improvement over the next 12–18 months. The portfolio positioning should reflect the above trends.
How much weightage should one give to gold and silver, particularly in the context of the sharp run-up seen in 2025 so far? Is it time to load up equities and underweight precious metals?
Gold and silver have rallied sharply in 2025 — up more than 50% in USD terms — driven by heightened geopolitical tensions, central bank buying, industrial demand for silver, and strong investment inflows through ETFs. While it is difficult to call out a definitive top in precious metals amid ongoing global uncertainty and monetary easing, equities remain the preferred asset class for long-term investors due to their income-generating potential and growth prospects. Investors may retain some allocation to gold and silver as a hedge against global and currency risks, but should increase their relative weight in equities, especially in regions and sectors positioned for cyclical recovery in demand and earnings.
As a long-term investor in the Indian equity market, how bullish are you on platform companies? In the last 3-4 years, how has the Indian market learnt to appreciate the long-term potential of these companies and make peace with higher valuations?
We remain bullish on the platform economy from a long-term perspective given the opportunity size and inefficiencies in traditional businesses. Consumers (especially in mid to high income brackets) are increasingly shifting their purchasing behaviour to platforms due to factors such as better availability, convenience, ease of ordering and standardised post sales experience. As a result, platforms are able to generate humongous amounts of consumer data that in turn helps to fine tune their operations. This leads to a flywheel effect over time. Scale becomes a big moat for these platform businesses that in turn leads to significant operating leverage benefits.
Indian investors have started appreciating these business models; especially those that have a long growth runway and have demonstrated strong execution. While high valuations continue to keep investors wary, especially for unproven business models; investors are increasingly willing to evaluate new age companies with an open mind.
What’s your outlook for corporate earnings in FY26 and beyond? Do you see the current phase as consolidation before a broader market breakout?
Since the post-COVID recovery, Indian equities have delivered strong earnings growth of ~20% CAGR till H1FY2025, driven by volume recovery, premiumisation, margin expansion, and balance sheet improvement in banks. However, most of these tailwinds are now largely behind us, and earnings growth is expected to normalise to around 9–10%, in line with nominal GDP. The current market consolidation reflects a reset of market expectations to this new earnings reality, as investors reassess valuations amidst global uncertainties — including trade issues, monetary policy shifts, and geopolitical tensions.
Despite near-term volatility, India remains a compelling long-term compounding story. External uncertainties remain the last wall of worry for the market to climb. The outlook now favours steady, fundamentals-driven growth, offering a stable and resilient environment for long-term investors.
Some foreign investors complain that the market is still expensive and that earnings growth is yet to justify PE multiples. At current levels, how comfortable are you with valuations at the index level?
In our view, it’s important to recognise that the perspective of foreign investors is shaped by two key structural differences compared to domestic investors.
1. Global Opportunity Set: Foreign investors operate with a wide lens, evaluating India alongside other emerging and developed markets. Their capital is mobile and benchmarked against a global opportunity set. When Indian equities trade at a premium to peers, they naturally question whether the growth outlook justifies that premium.
2. Dollar-Based Hurdle Rates: Their return expectations are calibrated to the cost of capital in USD terms. With US interest rates remaining elevated, the hurdle rate for deploying capital in India has risen. This makes valuation sensitivity sharper, especially when earnings growth moderates or macro risks rise.
As mentioned earlier, as domestic investors, we are quite comfortable with large cap valuations and are getting more comfortable with mid and small cap valuations, post the one-year consolidation. We are however more bottom up in our approach favouring select opportunities which offer value.
Finally, what would be your key message to investors as they enter the new Samvat (year), especially in terms of asset allocation, discipline, and managing expectations in a dynamic macro environment?
As we enter the new Samvat (year), investors should adopt a pragmatic and disciplined approach to asset allocation. Market returns are likely to track earnings growth of around 10% annually, in line with nominal GDP, while India’s low inflation and healthy real interest rates create a favourable environment for sustainable real returns. Investors should maintain a balanced and diversified portfolio with a long-term bias towards equities, which continue to offer superior real return potential in the current macro setup. It is important to stay disciplined, adhering to your long-term investment plan through market cycles and focusing on fundamentals rather than reacting to short-term volatility. Finally, investors should manage expectations realistically — while 10% nominal growth may appear moderate, when adjusted for low inflation, it translates into healthy real returns, particularly in comparison to developed markets struggling with low growth and high inflation.
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