As we advance in fiscal year 26, global nerves such as the threat of the Trump rate with domestic optimism, especially after the idiot pivot of the RBI. How do you evaluate the broader macro environment for Indian investors, and it is the reduced rate of the start of a larger or unique flexibility cycle?
This is going to be a very interesting year. In the domestic front, we are in good shape with multiple help factors. We have the low base effect of the FY25 since the profits in the first two quarters are very strong. With the liquuidity challenges that are addressed and consumption is likely to increase, we can expect a growth of corporate profits of two digits this year. The valuations have been corrected since September-artbe maximum baby, giving cushion. The global macro challenges will be difficult to address, but I am closely observing the Rupee-Dollar equation, which has recently stabilized. This makes India a better investment destination for foreign investors than six months ago. If the currency remains stable, we should see that the FII returns.
The flexibility cycle in India is never very strong. It occurs from time to time, but the key factor is not only the cycle of speed reduction or flexibility of the cycle, but more importantly, liquefy in the system. We have seen challenges with banks that experience exits, slow growth of deposits and general liquuidity problems due to delayed government spending elections. The liquuidity situation is now decreasing, with RBI that performs open market operations. I would see the 25 percent rate cut as part of a flexion phenomenon, but I do not anticipate huge cuts from here.
With the transmission of rates that take time and liquidity that still decrease, what sectors or pockets of the market are ready to benefit from this environment?
When a rate cut is produced, the transmission time such as banks must implement changes depending on their cost / income ratio, indebtedness costs and liquuidity challenges. The liquuidity situation has a bit easy, but it is not yet as favorable as two or three years ago. . NBFC tend to be immediate beneficiaries, since they are more based on domestic consumption. Banks could see some degree of benefit.
Travel and hospitality must inform good numbers due to events such as Kumbh Mela, where they visited 40-50 million rupees, promoting a significant travel activity. I am not sure that FMCG delivers excellent numbers this quarter, but the approach will be in the sequential improvement as the base becomes softer with each quarter that passes, placing the sector well in the future. In the classic CAPEX cycle sector, we should see a degree of improvement in areas such as capital goods. The cement will be interesting to see, since the numbers of this quarter should be better.
Should Indian actions see global commercial tensions such as an Ovhang or a strategic opening, and how exposed are sectors such as this and chemical products for this risk?
They are both. The immediate effect refers to how the global economy develops, with the two largest economies that participate in a commercial war, which is good. This could affect national exports, lead to define China’s export and create several challenges. If it is a strategic opening, it depends on how things evolve the sector by the sector, where the sectors are more resistant and can adapt. It is not a direct response or an easy opening because we are seeing a very different cycle.
It has a second order effect instead of a direct impact, since the economic deceleration of the United States will affect the IT sector. Some reducers have already happened in it, but a recession could also mean more subcontracting. It is an evolving scenario, and I would not do it at this juncture. Chemicals are separated: we like specialized chemicals instead of bulk chemicals. We are quite competitive where we operate, with better cost structures similar to pharmaceuticals. It would be cautious about it at this time, but if you correct more, there could be an opportunity to see this sector again.
With the profit and BFSI profit season that maintains the weight in the index, can we meet EPS’s expectations for the fiscal year25 for NIFTY50?
Let’s see how it develops. About 40 percent of the profits are linked to the BFSI sector, which should be dent numbers. I am not sure if the growth will be 14 percent or 12 percent, but the most important factor will be the sequential improvement: it shows that the quarter quarter numbers are compared to the Q3. The market has already taken into account many challenges, since the markets are very efficient. You can see today in this fall, banks like HDFC and the axis have done well: they fell much earlier and recovered faster. Some cycles are still weak, such as the petrochemical cycle. The 14 percent growth seems to me at this time, but if the results are sequentially better, we should be in a good position.
Do you currently prefer large or medium/small layers, especially with valuations with a slight discount indicator and risk indicators such as higher VIX edges?
It has become very specific for stock at this time. Great caps sacrifice the safety of liquus: if things go wrong, it should be able to liquidate its wallet, which is possible with small caps in a challenging environment. Therefore, large caps tend to work well for this reason. However, asking which category could work better at the end of fiscal year 26 is difficult to respond. Small CAPS can offer good numbers if the economy works well and if the global competitive scenario changes, since they can adapt faster and reconfigure more than the largest supply chains. From a risk perspective, with Vix in a slightly higher area that indicates a higher risk, large layers are currently favored.
SIP and DII activity remain strong, while FII flows are choppy. How important are domestic flows for fiscal year 26 and what is the only issue you are seeing closely?
Domestic flows have been strong. SIPs tend to have a very high persistence rate. I think these investments will continue because the shares are relatively cheaper now and investors can see absolute ascent at these levels. Therefore, there will be a continuous assignment to domestic actions. I don’t think anything stops that. The critical factor will be how the FII behaves. The demand for national institutional investors must remain stable. If Fii’s outlets stop or simply become positive, we could be in a very good shape.
In recent years, many issues have been developed in the capital goods sector. If I had to choose a dark horse right now, I think the PSU could be an area that works well throughout the year. They are in reasonable assessments and have corrected a lot, but nothing has changed in terms of their general force. If the economy serves properly, PSU could work well. Second, consumption could return, we will see how it develops.
