Daily Voice: Market near bottom, these 3 sectors look interesting for FY26, says this portfolio manager

Prabhakar Kudva is the Director and Principal Officer - Portfolio Management Services at Samvitti Capital

"Given the velocity of the correction and the deterioration in the market breadth, it is likely that we are near the bottom," said Prabhakar Kudva, the Director and Principal Officer - Portfolio Management Services at Samvitti Capital in an interview to Moneycontrol.

However, a full recovery back to the highs is likely to take time for the broader markets, according to him. He believes by the middle of the calendar year 2025, the issues around tariffs should settle down globally.

Financials, pharmaceuticals and textiles look interesting from both a growth as well as valuation point of view for FY26, said Prabhakar Kudva with more than 20 years of experience in capital market.

Do you expect global uncertainty regarding tariffs and commodity prices to remain high at least until the next quarter?

Yes since the clarity around reciprocal tariffs is likely to come in April 2025, the uncertainty and news-flow around tariff should continue well into the Q4. It is likely that by the middle of the calendar year 2025 the issues around tariffs should settle down globally.

Related stories

Prabhakar Kudva

Director and Principal Officer - Portfolio Management Services|Samvitti Capital

Are you betting on financials and consumption sectors, which are unaffected by Trump tariffs?

Financials are likely to do well given that the valuations are subdued and the sector hasn’t done much over the last couple of years. There is a good chance of a reversion to mean from the neglected state it has been in. The rate cut cycle should also aid the recovery in this sector.

Traditional consumption like staples is not likely to do very well given the high penetration and high competitive intensity in the sector. What may do well on the consumption side is allied sectors like QSR, travel and tourism and to some extent select consumer durables.

Is the market near its bottom now?

Given the velocity of the correction and the deterioration in the market breadth, it is likely that we are near the bottom. However a full recovery back to the highs is likely to take time for the broader markets. The sectors leading this recovery will also be new names and unlikely to be the ones that did well over the last couple of years.

Do you think the challenges faced by Indian equities so far have been addressed? Does this mean there will be no significant risks for the rest of 2025?

Most of the major events like the US elections, the Indian Budget and key state elections are over. There are no major known events coming up this year. Also with a fairly good correction the probability of the upside is more than the downside for the rest of the year.

Which sectors look attractive for investment now, especially after the correction seen since October 2024?

Financials, pharmaceuticals and textiles look interesting from both a growth as well as valuation point of view for FY26.

Are you bullish on the EMS (Electronic Manufacturing Services) space?

EMS is a very large multi-year high growth opportunity for India if it’s played right. The government seems to be doing all the right things and the private players are also investing to ramp up capacity at their end. Over the medium to long term this remains a promising sector.

With the valuations now more sensible it should see selective buying interest from the institutions if the growth rates are maintained for the next few years.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.