What are you making of the market right now in terms of how the earnings have shaped up so far? The first half of the earning season was not that good but in the last three or four sessions, we have seen good moves coming in.
Pashupati Advani: Traditionally we have had companies that have good earnings trying to come out earlier and the ones with indifferent earnings came out in the latter half of the month. This time it has been the reverse, where the worst ones have come out first and the better ones have come towards the end of the month and that has given a little bit of a push to the markets and that has made everybody happy.
The reality is that a lot of this is temporary because we are really in a position to be able to absorb a 25% tariff hike into the US. People just have to look into which companies are benefiting and which companies are going to get hurt. and in those and then try to figure out which ones are going to do well and which ones are not going to do well.
On my side, I feel that IT stocks should be under pressure. Unfortunately or fortunately, today they are the active winners, with TCS and Infosys up there in the top part of the gainers, but that is temporary because the model is having to be changed and I do not know whether these two can actually lead the others and make the model change so that people will be able to benefit. This has got nothing to do with the markets, but has to do with the way AI is coming and the way Microsoft and Google and open AI are changing the world. It is here to stay.
In this market, select underperformers are also holding up, a case in point being autos and staple companies. In the near term, the news flows regarding the market share gain, the earnings are boding well. Do you trust this move for a good runup from these levels, from an investor point of view or should one really bet on these themes right now?
Pashupati Advani: The reality is that the government is continuing to spend to stimulate the economy. They are going to continue in infrastructure, real estate, and roads. So, those companies that benefit from that are going to be in the space and will be the ones to buy.
Again, pharmaceutical companies are doing okay. We seem to have gotten some reprieve from the US because a lot of the pharmaceuticals are considered to be essential, and so they have not been on the tariff list or are at a much lower tariff and that is good for us.
One of the things that people have not noticed so much is that the US used to have a ban on small packets that used to be sent by post into the US and a lot of pharmaceuticals were coming as second sale from Canada and from Mexico into the US. That has now stopped and that is going to have some effect but it is not really going to be meaningful because our pharmaceuticals can go straight in.
I am very bullish still on cement, steel, and to some extent on infra companies and even though big pharma in the US is getting attacked by the US president, I would consider our pharma companies to be small pharma, and we should be able to slip in and as generics, we are able to do well. These sectors are definitely going to be interesting for us in India.