Shailendra Kumar of Narnolia Financial Services believes the key development to watch in the Q1FY26 numbers is whether the current 12–13% full-year FY26 earnings growth projection will be upgraded.
While the underlying trend of the economy is now positive, its impact on corporate earnings will become evident only over the next few quarters, he said in an interview with Moneycontrol.
Commenting on the Jane Street issue, he noted that the past four years have seen an unprecedented boom in futures & options (F&O) trading, which 'unfortunately', has also created opportunities for market manipulation. The Jane Street incident, in particular, serves as a significant learning moment for the entire financial system, said the chief investment officer at Narnolia Financial Services.
Do you expect India’s GDP growth for FY26 to be closer to 7% rather than 6.5%, assuming there is no sharp spike in global commodity prices?
India's GDP growth in Fiscal Year 2026 is poised to surpass the 6.5% achieved in FY25. The preceding fiscal year (FY25) commenced amidst a restrictive fiscal environment, a tight monetary policy, and significant regulatory intervention. However, as FY26 progresses, these conditions have favourably reversed. The initial two months of FY26 have witnessed robust growth in public capital expenditure, while the Reserve Bank of India has implemented substantial interest rate cuts and reduced the Cash Reserve Ratio. These supportive policy shifts are anticipated to bolster economic performance in FY26.
Current projections indicate a growth rate of approximately 6.75%, with an upward bias, which is expected to become more evident as global uncertainties related to tariffs subside.
How do you interpret the recent Jane Street manipulation episode? Do you believe SEBI will further tighten regulations to curb expiry-related volatility and send a strong message to deter any future manipulation attempts?
The past four years have witnessed an unprecedented boom in Futures & Options (F&O) trading, which, regrettably, has also opened the door to market manipulations. The Jane Street incident, in particular, offers a significant learning opportunity for the entire financial system. For our market to mature sustainably, it's crucial to prioritize fairness, ample liquidity, and inherent system stability.
To address these concerns, SEBI has introduced new reforms for F&O trading. As these new rules are phased in between July and December 2025, we will better understand how they contribute to achieving these important goals.
Many market experts are projecting a surprise upward move in the IT and consumption sectors. Do you share this view? What could be the catalysts for such a rally?
Despite the IT sector growth returning to single digits and margins falling to levels last seen between FY15-FY20, current valuation multiples remain stubbornly high. This disparity is why we continue to hold an underweight stance on IT stocks. Nevertheless, there are pockets of strong growth and investment appeal within certain smaller sub-segments. Going forward, Artificial intelligence (AI) is expected to become a significant catalyst for the sector's growth and margin improvement, though its quantifiable impact is still pending.
We see the consumption sector as a more promising area for investment. Much of the uncertainty around sales channel evolution—from traditional general trade to the rise of e-commerce and quick commerce—has now getting settled. Additionally, with a few years of performance data, the influence of digital-first brands has become more predictable. This enhanced visibility gives us greater confidence in determining appropriate valuations for the sector and identifying the winning business models going forward.
Do you think valuations in capital market-related stocks are currently stretched? Are we nearing a point where caution is warranted in this space?
While the capital market benefits from robust long-term tailwinds, current valuations are challenging. Therefore, partial profit booking is recommended. However, it's crucial to remember that any future market corrections will present excellent buying opportunities at lower prices.
Despite the sharp rally since March, do you believe the financial sector still offers attractive valuations? Which segments within financials do you find most compelling?
Minor segments within the financial sector have performed exceptionally well lately, yet the banking sector, its primary component, has seen only moderate gains. Consequently, banks and insurance companies provide better valuation comfort for new investments at current levels.
What is your assessment of the provisional numbers released by companies and banks ahead of their June quarter results? Do you think these numbers indicate strong underlying performance that can continue to support the market?
Although the economy's fundamental trend is now positive, its impact on corporate numbers will only become evident in a few quarters. For Q1 FY26, the crucial development to watch is whether the current 12-13% full-year FY26 earnings growth projection receives an upgrade, based on companies' operational results and their management's forward-looking statements during the earnings season.
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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