“We are still seeing tepid consumption and discretionary spends. Things should start improving by the third quarter, with a clearer picture emerging in Q4,” Mistry said.
Banking, travel, cement, and two-wheelers among key buys
While Buoyant Capital remains constructive on banking stocks, Mistry said the fund has trimmed exposure slightly after an extended overweight position.
“We continue to like financials, but much of our incremental exposure is moving toward sectors that benefit from rural and middle-income transfers — such as travel, leisure, cement, and two-wheelers,” he said.
Mistry added that individual homebuilders, who form nearly 70% of cement demand, are likely to drive near-term momentum as state-level welfare spending and income transfers support non-discretionary consumption.
Liquidity and policy shifts shaping market tone
According to Mistry, policy actions in recent quarters — including state-level freebies worth nearly ₹5 lakh crore and tax and GST concessions by the Centre — have temporarily supported consumption, but at the expense of investment-led growth.“We’re seeing a shift from capex-intensive to consumption-driven growth. However, liquidity tightening by the RBI in 2024 is now reflecting in weaker earnings momentum,” he explained.He expects conditions to improve gradually in early 2025 as liquidity normalizes and the rupee stabilizes.
Primary market frenzy raises valuation concerns
Commenting on Lenskart’s tepid listing, Mistry said valuations across several IPOs appear excessive relative to fundamentals.
“We stayed away from the Lenskart IPO. These are great businesses, but the valuations at listing rarely hold up across cycles,” he said, adding that value-conscious investors should remain cautious.
Smallcaps still resilient, but FIIs yet to return fully
While foreign investors continue to remain cautious, Mistry highlighted that domestic inflows of nearly $60 billion in the past 12 months have kept markets buoyant.
“If household equity allocation rises from 5.6% today to even 10% in a few years, domestic flows could double — making India’s small and midcaps structurally resilient,” he said.
However, he warned that high valuations and rupee depreciation are still deterring FIIs from making a strong comeback.