Daily Voice: Waterfield’s Vipul Bhowar expects strong double-digit market returns by next Diwali, bullish on these 5 sectors

Vipul Bhowar is the Senior Director, Head of Equities at Waterfield Advisors

With expectations for an earnings revival and more grounded valuations in the near future, the consolidation experienced during Samvat 2081 has created a stable foundation, Vipul Bhowar, Senior Director, Head of Equities at Waterfield Advisors, said in an interview to Moneycontrol.

In Samvat 2082, projections indicate a sharp rebound in earnings, positioning the Indian equity market for a promising year with the potential for robust, double-digit returns, he believes.

Vipul Bhowar is quite optimistic about NBFCs specialising in gold lending, co-working spaces, quick service restaurants, life insurance, and healthcare (including hospitals and diagnostics).

The recent consolidation period is being viewed as a healthy absorption phase, which paves the way for the next growth leg in the market. With expectations for an earnings revival and more grounded valuations in the near future, the consolidation experienced during Samvat 2081 has created a stable foundation.

As we look ahead to Samvat 2082, projections indicate a sharp rebound in earnings, positioning the Indian equity market for a promising year with the potential for robust, double-digit returns.

The sector is currently experiencing short-term challenges due to seasonal factors, including furloughs, cautious discretionary spending patterns, and geopolitical uncertainties. However, sentiment within the industry suggests that the most significant phase of demand contraction may be behind us.

Factors such as increasing digitisation, a growing need for artificial intelligence and machine learning skills, potential reductions in Federal Reserve interest rates, and the depreciation of the Indian rupee are anticipated to bolster revenue growth and facilitate earnings recovery in 2025 and subsequent years. These developments may alleviate the prevailing underweight position.

Indian consumer staples have shown steady demand, mainly because essential products like food, beverages, and household items are always needed, regardless of how the economy performs. This makes the consumer staples sector known for consistent growth and stable performance. Meanwhile, consumer discretionary stocks include non-essential items and services like cars, clothing, travel, and entertainment, which tend to do well when people feel confident and have extra disposable income.

Looking ahead, India's future is all about improving lifestyles and larger aspirations. As everyone's income increases, more spending goes toward cars, stylish clothing, and a variety of services. With earnings expected to grow strongly and consumption rising, consumer discretionary is poised to play a vital role in fueling the country's economic progress.

The Reserve Bank of India (RBI) has recently upgraded its GDP forecast for the fiscal year 2025-26, now predicting a 6.8 percent growth compared to the previous 6.5 percent. This positive update reflects strong domestic demand, a resilient service sector, increasing private investments, and healthy rural consumption supported by good monsoon conditions and government spending. It also considers the promising developments expected in the upcoming quarters.

As a result, the RBI is likely to keep a cautious but steady approach in its upcoming policy meetings. This balanced strategy is designed to promote economic stability amid external uncertainties, while maintaining the healthy growth seen during Samvat 2082, without risking an overheating of the economy.

Gold futures recently hit $4,380 per ounce, marking an amazing 65 percent gain for 2025, while silver climbed to $54.38 per ounce, showing a solid 78 percent increase. Both metals reached new record highs amid geopolitical uncertainties, expectations of dovish Fed rate cuts, and strong central bank purchases.

After such impressive rallies, it's understandable to anticipate some short-term corrections and pullbacks. For long-term investors seeking protection and diversification, it's helpful to keep exposure to single-digit percentages and consider buying gradually during price dips. This balanced approach can help us navigate market changes with confidence and peace of mind.

We are quite optimistic about NBFCs specialising in gold lending, co-working spaces, quick service restaurants, life insurance, and healthcare (including hospitals and diagnostics). Additionally, we have a tactical investment in Metals.

These sectors are supported by promising earnings potential, a cyclical rebound, and a supportive macroeconomic environment, all contributing to the overall positive growth outlook in Samvat 2082.

We believe there are good investment opportunities in metals, quick-service restaurants (QSR), and building materials. Our view is that these sectors are recovering and have strong fundamentals. Overall, their valuations and outlooks provide attractive chances to invest, especially as the broader market shifts.