India's corporate earnings should pick up in the next two quarters, veteran investor and Managing Director of MK Ventures Madhu Kela said on November 28, adding that he sees the market setup as 'constructive' after signs of 'euphoric moments' in some spaces and companies.
In conversation with CNBC-TV18, Madhu Kela said government's capex expenditure was slow due to recent elections as well as the monsoon factor, both of which are out of the way now. The Centre too indicated recently that the capex will resume and in all likelihood there should only be a minor under-shooting for the fiscal year on the whole, with the government expenditure being higher than last year's figure.
Read More: Govt capex to rise to Rs 1.16 lakh cr to meet the target: Kotak's Nilesh Shah
Madhu Kela pointed out that select names have seen a deeper correction of up 50-60% from recent highs, when the benchmark index entered a technical correction of 10%. "This has been a good move to consolidate these stocks," he said, adding that the stock market is extrapolating the last two quarters' performance. "We have to view it in the context that government expenditure was relatively lower due to election and other issues, possibly a bigger heat wave this time."
Read More: MFs buy big amid market correction in October, target top Nifty stocks
"Once government expenditure picks up and money starts to trickle down, the corporate earnings, which is the heart of market, should really pick up in the next two quarters (Q3 and Q4FY25)," Madhu Kela added. He cited his own channel checks with companies that are suggesting the outlook has been 'quite positive' for November as well as October.
Madhu Kela also said the formation of President-elect Trump's administration and his choice of people at key positions is a big positive which the domestic stock market is not fully factoring in yet. The incoming US Treasury Secretary - billionaire hedge fund manager Scott Bessent - is likely to have a positive stance on India, he said, through he does see possibility of higher trade tariffs under the new administration.
Bessent has previously criticized President Biden’s administration over federal debt, and has talked about expanding “friendshoring” for a tiered-system among trade partners.
"India is a natural ally to the US, and a lot of their businesses are also dependent one our services back from here," Madhu Kela said, highlighting the country's natural advantage with US.
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