Daily Voice: Invasset PMS' Anirudh Garg expects strong topline growth across most sectors in Q1FY26

Yes, we expect strong topline growth across most sectors in Q1FY26, excluding IT. High-frequency data such as robust GST collections, 6%+ credit growth, steady power demand, and improving capacity utilisation in manufacturing point towards sustained economic activity. Sectors like capital goods, financials, and even select consumer names are likely to report decent revenue growth.

While global headwinds remain, India’s growth story continues to be led by strong internal levers—public & private capex, consumption momentum, and financial sector robustness. Even as raw material costs have normalised, pricing power and operating leverage are likely to support margins in several pockets. The earnings delta will increasingly be driven by volume growth rather than input arbitrage, reflecting healthier business dynamics.

Do you expect renewed buying interest in the IT sector after the June quarter earnings, given that last commentary suggested the worst is behind us?

We’re seeing early signs of stability in the IT sector, but it would be premature to call a full recovery. Deal pipelines have held steady in areas like BFSI and cloud transformation, but overall tech spending remains cautious, especially from global clients. While some large players have hinted at stabilisation in volumes and order flows, others continue to face subdued discretionary spending and slower decision cycles.

The June quarter will be key in confirming whether margins and demand have truly bottomed out or if weakness persists. Valuations in the sector have already corrected, which limits downside, but also suggests that a sharp upside will likely require sustained visibility on earnings growth. For now, the sector may continue to see selective investor interest, especially in niche IT or engineering services names, rather than broad-based re-rating across the board.

Do you anticipate further disruption in the staples segment due to the rise of quick commerce? Does this imply that investors should avoid the staples sector?

Quick commerce is indeed altering consumer purchase patterns, especially in urban pockets. However, it’s more an evolution than a disruption. Large FMCG companies are adapting by partnering with platforms like Blinkit and Zepto or building their own digital supply chains. Near-term pressure may persist on traditional distributors, but structurally, the staples sector remains relevant due to brand stickiness and scale-driven margins.

We don’t believe this is a sector to "avoid" but rather one to selectively approach, focusing on players showing agility and pricing power. Rural recovery and input cost stability could also provide tailwinds in the second half.

Do you believe the uncertainty surrounding policy and tariffs will persist through the remainder of Donald Trump’s presidency, if re-elected?

A Trump presidency may reintroduce elements of policy unpredictability—especially around tariffs and foreign policy. However, the global supply chain narrative has evolved post-COVID, and India is now more integrated into China+1 strategies than it was in 2016.

While volatility in sectors like IT services or pharma outsourcing may increase, India’s large domestic market, bilateral trade discussions like with EU/UK, and focused industrial policy could mitigate long-term risks. In fact, specific sectors like defence, chemicals and manufacturing could see net inflows from a shift away from China, even under protectionist regimes.

Do you foresee healthy performance in the discretionary consumption space going forward?

We remain structurally constructive on discretionary consumption. Indicators like robust passenger vehicle sales, increased credit card spending, and record air travel numbers suggest that urban discretionary demand is holding up. While rural consumption has been patchy, the outlook is improving with better monsoons and government support measures.

Categories like premium apparel, travel, QSRs, and electronics are likely to lead, though valuations warrant selectivity. Importantly, India’s demographic tailwinds and rising aspirational spending make this a secular story, despite temporary inflationary hiccups.

Do you anticipate a strong up move in the equity markets in the second half of the year, now that the worst appears to be over?

The outlook for H2CY25 is turning decisively positive. With election-related uncertainty behind us and global headwinds like oil prices and FII outflows easing, the macro environment appears supportive. Expectations of a Fed rate cut, combined with India’s strong domestic indicators—robust GST collections, easing inflation, and a narrowing current account deficit—reinforce confidence.

While the market may not rally in a straight line, sectoral rotation and an earnings revival can drive meaningful upside. The political stability post-elections is expected to accelerate reforms and the ongoing capex cycle. We remain constructive on equities over the next 2 Years, with mid and small caps likely to benefit the most from improving earnings visibility and favourable valuation setups.

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