“Our faith in the India story remains strong. The phase of consolidation is over, and as growth returns, markets will do very well,” Khemani said in an interview with ET Now.
Liquidity, policy support, and earnings to drive the next market leg
Khemani noted that the liquidity crunch witnessed last year — triggered by RBI’s rupee defense and tighter lending norms — has reversed sharply.
With rate cuts, credit growth measures, and consumption-focused policies like GST rationalization and income tax cuts, India’s macro setup has turned supportive.
“Both domestic liquidity and foreign inflows are set to improve. As FPIs return, we should see a stronger and broader market rally,” he said, adding that India’s structural fundamentals are firmly in place despite global uncertainties.
Financials, manufacturing, and consumers to lead the charge
According to Khemani, banking and financial services, manufacturing, and consumer discretionary sectors will be the key outperformers this year.He expects PSU banks and select NBFCs to continue their strong run, supported by robust credit demand and capital efficiency.“BFSI remains the key channel for India’s savings. From PSU banks to insurance and capital market intermediaries, the sector offers a broad set of opportunities,” he added.
Khemani highlighted ICICI Bank, Aditya Birla Capital, and life insurance companies among the key plays in the sector.
Caution over private placements and unlisted stocks
While bullish on listed equities, Khemani raised a red flag on the current investor rush into unlisted shares
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He warned that many retail and family-office investors are chasing private placements at inflated valuations, without understanding the risks.
“Investing in unlisted space requires deep expertise — in price discovery, rights protection, and governance. Retail investors often realize risks only after the fact,” he cautioned.
‘Fad to fundamentals’: New-age tech stocks back in play
Khemani, who had earlier dismissed the 2021 tech IPO frenzy as a “FOMO-driven fad,” now sees a shift in fundamentals.
He believes new-age platforms like Paytm and PB Fintech have moved from “burning to earning,” improving their cash flow visibility and business models.
“When valuations corrected and business models matured, we began investing. Paytm at ₹550 was a value buy — not at ₹3,000. The key is identifying risk-reward, not chasing trends,” he said.
Global risks persist, but India’s structural story intact
On potential risks, Khemani acknowledged global uncertainty — from tariff disputes to deglobalization and geopolitical conflicts — but maintained that India’s macro repair cycle is complete.
“We’ll live in a multipolar, geo-conflicted world, but India’s structural risks are behind us. Short-term volatility may come, but long-term fundamentals remain robust,” he said.
Bottom line
Khemani remains firmly bullish on India’s growth trajectory.
With structural reforms, credit expansion, and policy tailwinds, he believes the market is entering a phase of sustainable earnings-led growth.
“Investors should stay invested and focus on stock selection. It’s not about timing the market, but owning the right businesses through cycles,” he conclude