In an exclusive conversation with ET Now, Hiren Ved, Director and CIO at Alchemy Capital, acknowledged that the past year has been challenging for markets. “Markets peaked in September 2024 and then we have seen several challenges from there on. So, we have had a fairly longish consolidation phase and perhaps rightly so because after very strong earnings growth between 2020 and 2024, we finally had very tepid earnings growth last year, as also the first half of this year,” he said.
Ved pointed out that while Nifty’s earnings growth hovers around 8–9%, the real momentum lies beyond the index. “Actually, all the growth is happening in the next 450 stocks, outside of Nifty,” he added. Yet, he believes the tide may be turning. “We are probably at a cusp where in the second half of the year, we should see a rebound in earnings led by growth in consumption.”
According to Ved, the Reserve Bank of India’s aggressive easing has been unprecedented. “I have never seen the kind of easing that RBI has done, not only in terms of interest rates and liquidity but more significantly in terms of loosening monetary policy. Provisions were tightened, risk weights had been increased, they are all being unwound now,” he explained.
Fiscal and Monetary Tailwinds
Ved underscored that both fiscal and monetary policies are now aligned to boost growth. “Last year we ran a very tight fiscal and monetary policy. Finally, we are letting go and we have loosened fiscal policy by giving tax cuts. First, we gave the income tax cut in February and now the GST cut and then we have seen significant monetary easing,” he said.
This synchronized easing, he believes, will revive consumption. “Consumption growth was really limping. I am hoping at least the early feedback is quite positive when you look at auto sales numbers, durables — I think this momentum hopefully should continue into this quarter as well,” Ved noted.
Autos, Housing, and Gold Leading the Way
While the auto sector appears to be one of the early beneficiaries, Ved expects the revival to be more widespread. “Clearly autos — cars, two-wheelers — is a big sector. We have had very good monsoons this year. So, we should see strong tractor growth, good growth in SUVs. Probably rural consumption will come back,” he said. Lower interest rates and better liquidity could also lift housing demand. Ved pointed out an often-overlooked factor fueling consumer sentiment — the surge in gold prices. “There is a massive wealth effect that will likely and this wealth effect is far more significant because Indians own gold culturally, generational wealth and that wealth has taken a massive leap,” he said, noting that gold loan financiers are already seeing the benefits.
He believes these combined factors could spur a broad-based recovery. “I am hoping that consumption improves on a very broad-based manner… you will probably buy a more premium appliance, go on a better holiday, and some of that will be saved, which hopefully should come back into the equity markets,” he added.
Defence and Aerospace: The Long Game
On the investment front, Ved reaffirmed his bullish stance on the defence sector despite recent corrections. “I still feel that it is a long-term theme. Unfortunately, we have a very hostile neighbourhood. We saw what happened with Operation Sindoor and I do not think we have a choice there frankly,” he said.
He emphasized that government policy is not only about national security but also about stimulating domestic manufacturing and job creation. “Whether it is defence and naval ships or even commercial ship building, there is a big leg up the government has given,” he observed.
Ved believes defence, aerospace, and shipbuilding together form a transformative opportunity. “Many companies are still very-very young and small and they can be 4x–5x their size over the next couple of years,” he said confidently.
Outlook
As India steps into the festive quarter, Ved’s message is clear: the groundwork for growth is being laid through synchronized fiscal and monetary easing, rising consumption, and powerful long-term manufacturing themes. The cheer of Diwali, it seems, might not just be emotional — it could soon be reflected in the markets as well.
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