“Keep buying, but in small amounts”: Strategy amid volatility
Responding to a question on how investors should approach likely market softness, Subramaniam maintained a constructive but cautious stance.
“No, you should keep buying but small amounts. Stagger them. Do not go in today. But clearly what we can say is yes, Mr Trump’s tweets and Iran’s responses will cause volatility. But you see, oil is not reacting too badly. It is 95. So clearly, a lot of the bad news is discounted in the price but that does not mean we are ready for a surge.”
He added that institutional positioning is gradually shifting, indicating that the worst may be behind for markets unless there is a major escalation.
“If you see FIIs last week, they started buying gradually by the end of the week. So clearly, they are also taking a position that the worst is behind us. DIIs on the contrary have been booking profits and pretty heavy profits because they are preparing for the earning season. So, they will redeploy as you get clarity around the earning season.”
He noted that recent retail-led optimism had driven the last leg of the rally, but sustainability will depend on earnings and global developments.
“A rally of sorts last week was most of retail, HNI driven who also felt the market was oversold. But the Friday’s good news has petered out over the weekend in terms of the claims and counter claims on whether there is talks in Pakistan or not, ceasefire is on or not.”He further added that downside risk appears limited unless there is a major geopolitical shock.
“I think that this is a time when you can be reasonably confident that the market is close to a bottom unless there is a very dramatic military development in the war.”
Banking sector: Strong credit growth, margin pressure persists
On the latest results from ICICI Bank and HDFC Bank, Subramaniam avoided stock-specific commentary but highlighted key sectoral signals.
“Yes, they beat guidance and they were good but also you got to look at the fact that there is definitely pressure on deposits, that is clearly seen because while HDFC had a good deposit growth, it has come at a higher cost and the NIMs are slightly under pressure.”
He emphasized that credit growth is strengthening, particularly in SME and business banking.
“The good news from both the results are the fact that credit is picking up especially in SME and the business banking side. So which means it is good news for the overall economy.”
On asset quality, he noted continued strength: “Another good news from both the results is the NPA levels are fairly quite low levels and indicates that corporate health is good.” He also made a notable observation on interest rates transmission.
“Whether RBI does a rate hike or not, banks are going to do rate hikes in the economy because they have to hike deposit rates to keep up with the credit requirement and naturally lending rates also will go up.”
Earnings season to guide next market move
With markets already rallying sharply from recent lows, Subramaniam believes the next directional move will depend heavily on corporate earnings and guidance.
“Definitely market will, especially DIIs will look at the earnings before taking a call on which sectors to back.”
He explained that headline earnings may be less relevant than forward-looking commentary.
“Actual QoQ earnings drop or even YoY drop market would have factored in. But the guidance for the future quarters and for the year is important.”
He added that capex commentary and margin outlook will be closely tracked.
“How are they looking at the further continuing impact of war? Are they going to face margin pressure and try to boost sales or are they going to protect margins and not worry about sales. That knowledge is important.”
FMCG: Demand recovery vs margin pressure
On the FMCG sector, Subramaniam pointed to improving rural demand but cautioned on input cost pressures.
“There was a strong rural pickup in terms of rural demand in credit, which augurs well for the FMCG.”
He also highlighted inflationary risks for the sector.
“Food prices are generally going to trend up plus the effect of the war in terms of gas for Urea. So, when farmers’ incomes goes up, that is actually a positive for rural demand.”
However, margins remain a key monitorable.
“There is going to be a good topline growth expectation this summer but margins will also need to be carefully watched.”
On valuation re-rating, he remained cautious. “Valuation multiple expansion is tough. It got to be driven by earnings. I do not think you can expect a valuation unless the war ends and the FIIs come back then they will pay a premium for India’s FMCG sector for its safety aspect.”
Defence stocks: Strong trend, but profit booking ahead
On defence, Subramaniam acknowledged strong retail-led momentum but warned of volatility ahead. “It is the retail HNI thing which has driven this rally and there defence is clearly a favourite for them. So, in the short run there should be a very bullish trend purely based on the overall geopolitical scenario.”
However, he expects profit booking during earnings season. “When the earning season pans out, you will see some profit booking and defence would be an ideal place where DIIs would book profits to generate cash.”
He prefers private sector exposure over PSU defence names.
“I would favour the private sector because the new-age weaponry, the drones and the UAVs, the private sector clearly has a lead there.”
Bottom line
Markets, according to Subramaniam, are likely nearing a near-term bottom, with volatility driven by geopolitics and oil, while the real directional trend will emerge from earnings season clarity, institutional flows, and forward guidance.
For now, the message remains consistent: staggered buying, selective positioning, and close tracking of earnings rather than chasing index momentum.