After lower than expected earnings growth for last couple of quarter, "in FY25, Nifty earnings are likely to grow at about 5%", said Sandip Bansal, Deputy CIO at ASK Investment Managers in an interview to Moneycontrol.
Given the pick-up in government spending, easing of liquidity conditions by RBI, boost to consumption expenditure provided by the Budget, benefits of easing inflation and rate cut, and the support of a low base of growth in FY25, earnings in FY26 are likely to grow in the mid-teens, he believes.
Donald Trump recently said he would introduce 25% tariffs on pharma. According to Sandip Bansal, given the criticality of the sector and alternative sources being higher costs, it is likely that the impact on Indian players is not high. Hence, near-term volatility aside, the sector is likely to do well over time, said the Chartered Accountant, who has more than 20 years of experience in equity markets.
Is the PSU space looking attractive for investment, even though the market has yet to stabilize?
The PSU space has underperformed, and valuations have become attractive given that in quite a few names, there has been good earnings delivery, and the growth story remains intact. In many sectors like defence, power, etc, they remain at the forefront. As ordering and execution are picking up, they have a strong investment case, keeping the fundamentals in perspective. Additionally, dividend yields are high in a number of them.
Do you believe strong earnings growth will return in FY26?
In FY25, Nifty earnings are likely to grow at about 5%. Given the pick-up in government spending, easing of liquidity conditions by RBI, boost to consumption expenditure provided by the Budget, benefits of easing inflation and rate cut, and the support of a low base of growth in FY25, earnings in FY26 are likely to grow in the mid-teens.
Do you think FIIs will return to India only in the second half of 2025?
As the currency stabilizes and corporates start to report good growth, FIIs are likely to start investing again. Valuations have become reasonable in many segments, and India remains a solid long-term growth opportunity in the global context.
Do you believe an Rs 250 SIP will be a game changer?
It is likely to help first-time investors and investors who would like to invest smaller amounts to enter markets. Over time, it might help broaden the investor base and collectively support market liquidity and overall growth.
Is this the right time to invest? Which sectors appear to be attractive for investment right now?
Nifty EPS forecast for FY26 is about Rs 1,200. So, it is trading at about 19x P/E on a one-year forward basis versus the last 10-year average of about 20.5x. While near-term volatility could remain due to weak sentiments and selling pressure by certain participants, investors with a long-term view might look to invest in a staggered manner.
We like sectors that have a long runway for growth. Manufacturing, defence and infrastructure are key beneficiaries of government policy initiatives, global diversification of supply chains and import substitution. Consumption, especially discretionary, will benefit from rising prosperity, increasing aspirations and young demographics. Healthcare, where India has a distinct competitive advantage, is the other space that we like.
Do you believe pharma will perform well despite tariff headwinds?
On tariffs for the sector, multiple scenarios are possible; such pharma companies could pass on the higher costs to consumers and insurers or steep tariffs could be avoided on essential drugs. The Indian government is in discussions with the US administration on this issue across sectors anyway, and some bilateral deals could emerge. India is the largest generic drug supplier to the US, accounting for about half its requirements. Given the criticality of the sector and alternative sources being higher costs, it is likely that the impact on Indian players is not high. Hence, near-term volatility aside, the sector is likely to do well over time.
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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