Bajaj Life's Chief Investment Officer (CIO) Srinivas Rao Ravuri expects a rate cut by the Reserve Bank of India (RBI) MPC next week.
"With CPI inflation at record-low levels, the RBI currently has adequate room to ease policy further, depending on how growth conditions, currency dynamics, and broader macro risks evolve," he said in an interview to Moneycontrol.
He is optimistic about a strong earnings recovery in FY27 as the economy reflects the full impact of recent fiscal and monetary measures announced by the government and the RBI, respectively.
Meanwhile, after the recent implementation of the four labour codes, he believes its impact will be more pronounced for startups and labour-intensive sectors going ahead.
Do you remain bullish on the overall equity markets despite the continued FII selling?
We remain positive on Indian equities, with a preference for large caps. This view is anchored in a meaningful corporate earnings recovery starting in H2 FY26 and strengthening through FY27. Valuations are at a modest premium to long-term averages, which is sustainable in an earnings-upcycle.
FPI selling and heightened primary market activity have added pressure, but strong DII inflows are offsetting this. With sustained selling in recent months, FPI positioning in India now looks light, and any reversal—potentially triggered by a cooling of the AI rally—could support a rebound in flows.
Do you strongly believe that earnings growth will pick up in FY27?
Yes. We are optimistic about a strong earnings recovery in FY27 as the economy reflects the full impact of recent fiscal and monetary measures announced by the government and the RBI respectively. This recovery will also come on the back of two years of subpar earnings growth (FY25 and FY26), providing a favourable base.
Do you think the prospect of an India–US trade deal materialising before Christmas aligns well with current developments such as energy realignment, tariff posture, and diplomatic signalling?
We have limited expertise in these areas and would avoid speculating. That said, elevated tariffs are clearly affecting certain sectors and adding volatility to markets. Any positive outcome on the US–India trade front—whenever it materialises—would only reinforce our constructive outlook on equities.
Do you see the RBI opting for a rate cut next week? Even after a possible December rate cut, do you think RBI still has enough room to ease rates further?
Yes, we expect a rate cut next week. With CPI inflation at record-low levels, the RBI currently has adequate room to ease policy further, depending on how growth conditions, currency dynamics, and broader macro risks evolve.
Both the RBI and the government appear to be working in a coherent and calibrated manner to support stable and sustainable growth in an otherwise volatile global environment.
Do you consider the new labour codes to be a game-changing reform for India and its sectors?
In a large democracy like India, sweeping, game-changing reforms tend to be incremental rather than abrupt. The government has introduced several structural measures over the past decade that strengthen the long-term growth framework.
The implementation of the four labour codes is another step in this direction, providing corporates with greater flexibility in workforce management while offering employees more standardized and enhanced workplace benefits. While these reforms apply across industries, we believe the impact will be more pronounced for startups and labour-intensive sectors.
Do you think US markets are concerned about the heavy investments flowing into AI and whether they can ultimately be monetised?
US markets saw a strong rally after an initial dip following tariff announcements, driven largely by optimism around AI. More recently, the rally has moderated as questions emerged about the circular nature of certain large AI-related deals, rising leverage, and the broader economic rationale behind some of the investments.
We believe AI will bring about transformational changes in how businesses operate and how consumers live. However, parts of the recent investment surge do exhibit characteristics of an early-stage bubble—something typical in major technological transitions. Ultimately, while the long-term potential remains significant, the success of monetisation will be critical and will only become evident over the next few years.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
