Market expert Nischal Maheshwari believes the latest economic data strengthens the case for policy action. “Yes, it is a very good print actually, 8.2% nobody expected that number. But we have to also just keep in mind that the nominal GDP number is not going to be very strong given that our inflation number is not very high and that could be a bit of worry as we go ahead,” he said. He added that recent cuts should help nominal GDP recover and noted, “As far as RBI is concerned I definitely expect a rate cut to happen… another quarter percent is on the cards,” he said in an interview to ET Now.
Economists are divided on whether the central bank should opt for a dovish hold or front-load easing. Maheshwari cautioned that the nominal growth trajectory remains soft despite strong real GDP. “The nominal number is going to be closer to still less than a double digit and that is a cause for worry… you should go ahead and do a quarter percent cut now and another quarter percent in two months,” he said, arguing that benign inflation provides room.
Market Breadth Still Uneven
Equity markets have shown pockets of strength, but the underlying breadth remains shaky. While the midcap index has surged to fresh highs, smallcaps continue to lag.
Maheshwari said the current set-up reflects a narrow rally: “It is not a very healthy breadth actually… there are only a few stocks which are driving it higher up.” He pointed to last quarter’s earnings, where smallcaps were the only segment that disappointed. “The best numbers came from the midcaps and then the largecap… smallcap has some way to go because the valuations are still very high.”
Banking Seen Entering a Strong Phase
Private bank stocks corrected recently, but Maheshwari remains optimistic about the sector’s prospects. “Banking is in a sweet spot. One, it has also not performed in the last one year and now we have got a 100 basis point rate cut already happened,” he said.
He expects the benefits of earlier transmission to emerge over the next two quarters. “You are going to see good credit growth happening as strong numbers coming from the banking,” he noted, adding that credit quality remains stable and provisioning remains adequate even for small finance banks and microfinance institutions.
IPO Watch: Profitability Improving, Valuations Still Stretched
Recent IPOs have reported improving profit trajectories, with companies like Lenskart and Studds drawing investor attention. Maheshwari believes new-age firms are adjusting their strategies. “Some of these guys… have now realised that topline is not the only thing and they have to focus on profitability,” he said. However, he remains cautious on pricing. “For a 20% kind of a growth… the valuations are very aggressive.”
On subscribing to new offers, Maheshwari reiterated his conservative stance: “None of these are really making sense for these kind of valuations.” He disclosed that he owns Urban, noting, “I am quite bullish about the services space rather than the product because to create services companies, it is very difficult actually.”