According to Divam Sharma, Co-Founder and Fund Manager at Green Portfolio PMS, India appears to be better positioned than many of its emerging market peers, buoyed by a strengthening manufacturing sector and an increasing number of domestic companies expanding overseas through acquisitions and the establishment of manufacturing units abroad.
Sharma is optimistic about the Indian equity markets, stating they are 'highly likely' to scale new record highs in the coming months. "Domestic cues are exceptionally strong, driven by positive corporate earnings and robust economic fundamentals," he said in an interview with Moneycontrol.
While large-cap earnings have remained relatively subdued, Sharma noted significant revenue and earnings growth in the small- and mid-cap segments, noting the broader strength of the market.
Do you think China is not in good shape right now?
China appears to be facing several internal challenges. Although much of the information doesn't make it out of the country, signs of strain are becoming visible. Weak demographics are beginning to reflect in its economic performance, particularly through declining consumption and sluggish investment activity. Additionally, the US-led push to localise manufacturing and shift production away from China is a long-term headwind, though the full impact of this transition is yet to materialise.
Why do global investors think India occupies a very special space in the emerging market basket with great opportunities?
Global investors are seeing something special in India these days. It's not just one thing, but a whole combination: think better global alignments in a world that's shifting to more localised trade. Then there's the huge young population with increasing buying power – a massive driver for growth.
India just seems better positioned within the emerging markets, with its manufacturing sector getting stronger and more domestic companies going global through acquisitions and setting up of manufacturing facilities abroad. It's a compelling mix that's hard to ignore.
Do you think the equity markets will still find it tough to reclaim record highs, though domestic cues are strong?
No, Indian equity markets are highly likely to reach new record highs in the coming months. Domestic cues are exceptionally strong, driven by positive corporate earnings and robust economic fundamentals. Even though earnings were weak in the large cap space, we have seen a sizeable revenue and earnings growth among the small and midcaps. These factors collectively create a solid foundation for sustained market ascent, making it improbable for the markets to struggle reclaiming their peaks.
Which are the best themes to play out in the remaining part of FY26?
In the remainder of FY26, a key theme to focus on is large-cap stocks that are delivering strong profits; these offer a compelling mix of value and growth. With steady domestic inflows and a likely pickup in FII participation, we expect these fundamentally sound names to see further rerating. The market seems to be rewarding earnings consistency and balance sheet strength, making quality large caps a strategic bet for the medium term.
Are you betting on the FMCG space?
We're not holding any significant positions in the FMCG space at the moment. That said, there are a few selective opportunities worth tracking, Wilmar being one of them. The focus remains on bottom-up stock picking rather than taking a broad sectoral call. We remain sector agnostic, picking up opportunities that align with our philosophy on high quality right price.
Most experts still see 25 bps repo rate cut on top of 100 bps cut? Do you agree?
A further 25 bps rate cut is certainly possible, but it should ideally come after a pause. The cumulative 50 bps cut we've already seen has been significant and has played a meaningful role in supporting economic activity and improving liquidity conditions. Whether or not we see another cut will depend heavily on a combination of global and domestic factors, including how geopolitical tensions evolve, the trajectory of global growth, inflation dynamics, and the strength of domestic demand recovery.
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.
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