ETMarkets Smart Talk: Focus on bottom-up stock picking - financials, defence, pharma, and specialty chemicals look attractive, says Paras Bothra
Tune in to hear where opportunities lie and how investors can navigate the months ahead with discipline and clarity. Edited Excerpts –
ADVERTISEMENT Q) We closed May on a high note but witnessed some volatility in June – is it geopolitical concerns weighing on sentiment?A) Yes, the volatility we are seeing is because of the geopolitical tensions emerging in the middle east and crude spiking up creating jitters in the markets.
Q) As we are about to end 1H2025, what are your expectations or assumptions for the rest of the year?
A) The rest of the year will see the surge in supply of papers in the primary market and the plethora of QIP and promoter block deals absorbing liquidity and capping market upside.Also, on the other hand there will be buoyancy in the market based on improved fundamentals because of interest rate cuts and ample supply of liquidity, normal monsoon boosting the economy and more specifically consumption.
Q) Are there any new or existing themes that are likely to do well in 2H2025?
ADVERTISEMENT A) Discretionary consumption is a theme which might gain momentum with lower interest rate and festive heavy second half.Themes like clean water, convenience services, airlines, govt policy supportive industries, digital advertising, hotels, tours & travels, selective industrial products & services, cooling products, financialization of savings, hospitals etc., seem to be riding on structural tailwinds and opportunities can be tapped in these segments when the market turns volatile and the valuation starts looking compelling.
ADVERTISEMENT Q) Geopolitical concerns weighed on crude oil in the past few weeks. How do you see crude oil moving in the near future and what could be the possible impact on earnings and GDP growth?A) Crude oil movement in the near future is more to do with war in the middle-east. But it may be short lived till the time tension between Israel and Iran is resolved.How long the skirmish continues is a fluid situation to predict. But any sign of restoration of normalcy will see supplies easing and crude oil prices coming down.
ADVERTISEMENT Crude oil price spike has an impact on Indian GDP and current account balance, but the dependency has reduced a lot with the passage of time and with the adoption in alternate sources of energy.
Q) In terms of valuation comfort – which sectors are on your radar? A) We are looking at companies more from bottoms-up and sectors like financials/NBFCs, capitals goods, pharma, discretionary consumption, defence, tours & travels, hospitality, hospitals, manufacturing/electronics, speciality chemicals are few sectors which look good.
ADVERTISEMENT
Q) How are FIIs looking at India amid falling interest rates globally?A) FII's will certainly look at India positively given what is happening in the developed market. Increasingly the emerging market is becoming attractive with rising/elevated bond yields in the US and given other macro headwinds in developed markets. Though we are yet to see a surge in India dedicated foreign funds.
Q) If someone plans to allocate say Rs 10 lakh (30-40 years) in 2H2025 – should they put fresh money to work? What is the ideal asset allocation? A) If anybody has a 30-40 years horizon of asset allocation, I think rather than timing the market, it is the discipline of uninterrupted SIP which will work wonders in compounding wealth. Equity as an asset class can be seriously looked at, because for such a long horizon, it will be for the younger generation in their twenties and having a risk appetite to digest volatility.
Q) How is the rate trajectory looking from the RBI? Do you think the front-loaded 50 bps cut was enough to boost consumption?
A) Yes, it seems rate cut is frontloaded and with the boost in liquidity it will support consumption.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
(You can now subscribe to our ETMarkets WhatsApp channel)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
5 hours ago
- Time of India
India bond traders eye US data, RBI liquidity operation for cues
Indian government bond yields were largely unchanged in early deals on Thursday, as market participants awaited crucial U.S. jobs data after market hours and measures from the local central bank in response to a widening banking liquidity surplus . The yield on the benchmark 10-year bond was at 6.2830% as of 9:45 a.m. IST, after closing at 6.2892% in the previous session. The five-year 6.75% 2029 bond was at 5.9492% after ending at 5.9522% on Wednesday. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like POROSI TANI +355677168901 | Koha nuk ka qenë kurrë kaq elegante. Reklame nga | Enzo Attini Undo "It is just a wait-and-watch game for today, before an eventful Friday," a trader with a primary dealership said. Bonds Corner Powered By India bond traders eye US data, RBI liquidity operation for cues Indian government bond yields remained stable as investors awaited U.S. jobs data and the Reserve Bank of India's response to a growing banking liquidity surplus. Market participants are anticipating potential rate cuts by the Federal Reserve, influenced by weaker economic data. The RBI's liquidity management policy and upcoming bond sales are also key factors affecting market sentiment. ETMarkets Smart Talk - FPI outflows from Indian bonds likely tactical profit booking, says Puneet Pal of PGIM India AMC Indian bonds confined as traders await RBI's liquidity steps, US data Call money market sees Rs 3,000 crore surge in volumes as extended trading hours begin Tariffs, Deficits, and Yields: How Trump's policies are reshaping global bond markets Browse all Bonds News with The U.S. nonfarm payroll data for June is due later in the day, and a weaker reading would boost chances of a faster pace of rate cuts from the Federal Reserve. Currently, there is a 27% probability that the Fed will reduce rates at the end of this month, according to the CME FedWatch tool, while the market has fully priced in a 25 basis point cut in September. Live Events The odds of a rate cut in July increased after U.S. private payrolls unexpectedly fell in June. Traders remain focused on the Reserve Bank of India 's liquidity management policy, after it withdrew 850 billion rupees from the banking system through an operation that is due to mature on Friday. A follow-up announcement is expected after market hours, with the spotlight on whether the RBI chooses to increase the quantum of withdrawal amid a rising liquidity surplus and a plunge in overnight rates. New Delhi will sell 320 billion rupees ($3.7 billion) of bonds on Friday, with the supply of longer-term notes likely to challenge investor appetite. RATES India's overnight index swap rates were barely changed, with shallow trading volumes. The one-year and two-year OIS rates were not yet traded, while the liquid five-year was marginally lower at 5.65%.
Economic Times
7 hours ago
- Economic Times
India to benefit from global manufacturing shift as China+1 strategy gains momentum: Ankur Jhaveri
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel In this edition of ETMarkets Smart Talk, Ankur Jhaveri , MD & CEO of JM Financial Institutional Securities Ltd., highlights how India stands to benefit from the evolving global manufacturing landscape, driven by the China+1 global companies look to diversify supply chains away from China, Jhaveri believes this structural shift presents a multi-year opportunity for also shares insights on key macro risks, sectoral valuations, policy expectations, and why rural consumption and domestic manufacturing are likely to be the twin growth engines in the coming quarters. Edited Excerpts –A) There has been a series of events in June that got investors glued on to emerging geopolitical dynamics. June has certainly been more nervous compared to May and immediate investment strategies seems to be rather said that it's not only geopolitical situation but also an expression of recent earning season that has impacted market volatility. Corporate commentary by large has been cautions, which has forced investors to re-calibrate their earning projects and multiples.A) Global environment continues to remain fluid since the change of US President. Tariffs, Monetary policy reaction, and geopolitical conflicts are driving market sentiments forward unfolding geopolitical events and finalisation of trade deals would be the key monitorable events from the market policy flip flops or further postponement of the tariff deadline would be negative for the US Dollar and hence should attract flows towards Emerging Markets.A) Global manufacturing is undergoing a shift, and the recent policy actions be it fiscal or monetary are all targeted towards benefiting the domestic manufacturing players have been diversifying their manufacturing capacities away from China, although other countries would also benefit from this shift, India too stands to gain. This is a multiyear theme and companies in the manufacturing supply chain will be the in the immediate near term we see that the conditions are aligned in favour of consumption. Easy monetary policy, Favourable weather conditions - onset of La-Nina condition and Fiscal measures like recent Tax exemption would all improve consumption demand in the domestic economy - especially rural.A) Geopolitical conflicts seem to be broadening with every passing day, its impact on crude oil depends on the incremental steps taken by these countries in be specific, the entry of US in the Iran-Israel conflict complicates the issue further, the extent of retaliation by Iran will have serious implications on Crude oil price. Brent crude price is already up 22.9% in June, Iran's decision to block the Strait of Hormuz would further fuel the imports form one fourth of India's total imports and out of 5.5 Mn Barrels per day (bpd) imports of crude oil currently, 2 Mn bpd is sourced through the Strait of its impact could be cushioned meaningfully if crude oil imports are diversified from Russia, which does not use this corridor to supply oil. We believe that proactive monetary and fiscal policies should support growth in the current fiscal, hence 6.5% growth seems achievable which should reflect in corporate earnings as well.A) Banks provide margin of safety on the valuation front, while other sectors appear to be fully priced or trade above the historical valuation should not be the only criteria in an investment decision, considering the global uncertainty in which these businesses are believe bottom up approach would be suitable in current macro environment, companies with decent earnings visibility trading at reasonable valuation would be preferred.A)It is worth highlighting that the comfortable inflation trajectory has allowed the global central banks to ease policy rates. However, it is the tariffs and the related disruption which would decide the inflation path going forward, especially in the US.A) The domestic inflation trajectory is expected to remain comfortable in the near term, which would allow the RBI to focus on growth, the governor indicated that the central bank is targeting a potential growth rate of 8%.Moreover, Governor Malhotra recently hinted that if the inflation outlook turns out to be below RBI's projection, it will open up more room for policy according to us is preparing the markets for more policy easing, however at this juncture we believe that the space for incremental policy easing if any would be restricted to the recent front-loading of rate cuts, we believe that RBI intended to deliver a positive shock to the economy which would eventually fasten the rate transmission, the advance announcement of the CRR cut was to cushion the Banking NIMs to some believe that a pickup in consumption is imminent once global shock settles and impact would be visible with a lag of a quarter or two.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Economic Times
7 hours ago
- Economic Times
ETMarkets Smart Talk - FPI outflows from Indian bonds likely tactical profit booking, says Puneet Pal of PGIM India AMC
Agencies This could very well be a case of profit-taking, and also the fact that the US-India interest rate differential has narrowed, leading to some capital reallocation. In this edition of ETMarkets Smart Talk, Puneet Pal, Head of Fixed Income at PGIM India AMC, addresses the recent $2 billion FPI outflows from Indian fixed income markets in June. Despite strong macroeconomic fundamentals and steady returns from Indian bonds over the past two years, foreign investors have begun paring their exposure. Pal believes this trend is largely driven by tactical profit booking and narrowing interest rate differentials between India and the US, rather than any structural concern. He explains why India's bond market remains fundamentally strong and why these outflows shouldn't raise red flags for investors. Edited Excerpts – Kshitij Anand: Let us start with the corporate bond segment. Why is the three- to six-year corporate bond segment seen as an attractive investment opportunity right now? Puneet Pal: We see the three- to six-year AAA PSU segment as an attractive opportunity simply because we foresee that there will not be any rate cuts over the next six months, at least until December. The RBI has indicated that there is limited room for monetary policy to support growth going forward, and they changed the monetary policy stance to neutral from accommodative in the June 6 policy. This makes us believe that there will be a status quo on policy rates, limiting the duration play in terms of overall returns from a fixed income perspective. This makes accrual an attractive opportunity. When we talk about AAA spreads, they are currently around 60 to 70 basis points over corresponding maturity G-Secs, which I would say is a pretty decent or attractive spread. Historically, in a rate-cutting cycle followed by abundant liquidity in the banking system, we have seen the spreads compressing to around 40 basis there is still some scope for the spreads to come down, which can lead to better returns. That is why we see this three- to six-year segment in the AAA PSU space as a better risk-adjusted investment opportunity. Click Here for Livestream - Why FPIs Are Selling Indian Bonds Kshitij Anand: You did mention that the RBI is probably not cutting rates anytime soon, but are there any other reasons why the current spread between AAA PSU bonds and G-Secs is historically attractive? Puneet Pal: Yes, because the RBI has committed to maintaining adequate and surplus liquidity to the tune of 1% of the means that liquidity in the overall banking system should be in excess of ₹2.5 lakh crore, which is a trigger for the spreads to come down over a period of time, as money will follow higher that AAA PSUs in the five-year space are trading anywhere between 6.75% to 6.85%, and the corresponding G-Sec yields of the same maturity are around 6.10% to 6.15%, it makes sense that one can enjoy a higher accrual as the rate cuts take a the high accrual will lead to higher returns, and if there is spread compression — which we do expect over the next two quarters — that will add to the higher accrual. Kshitij Anand: You talked about the liquidity the RBI is going to maintain, but how does the RBI's stance on liquidity and rate transmission influence short-term bond investment strategies? Puneet Pal: We have already seen banks reducing their loan rates as well as deposit rates, so rate transmission is happening. It is crucial for the RBI to maintain this excess liquidity for rate transmission to continue, which is why the RBI is committing to maintaining surplus liquidity in the banking we look at the durable system liquidity, which includes government balances, it is currently in excess of ₹5.5 lakh and when government spending picks up, we are likely to see more liquidity flowing into the system, which means that rate transmission through banking channels will gain further momentum. Kshitij Anand: Now, in case someone is interested in investing right now, what kind of investment horizon would you recommend for those looking to allocate to short-term or corporate bond funds at this point in time? Puneet Pal: We would definitely advocate that anyone investing right now should do so with a minimum horizon of 12 to 18 months. That is the bare minimum one should keep in mind when investing in short-term or corporate bond we talk about better accruals or spread compression, one needs to stay invested for at least 12 to 18 months to fully benefit from that. So, I would recommend a 12- to 18-month investment horizon for short-term or corporate bond funds. Kshitij Anand: Let me also get your perspective on what's happening on the international front. How have global central banks—like the US Fed or the Bank of Japan—responded to the recent geopolitical uncertainty? We've seen the US Fed holding off on rate cuts while the BOJ has slightly raised interest rates recently. How are you interpreting all of this? Puneet Pal: That's a very pertinent question, and it's going to remain relevant for the foreseeable future. I would say that every central bank is primarily reacting to its domestic inflation and growth example, in India, the RBI has emphasized that its monetary policy decisions are mostly driven by domestic factors—specifically, the growth-inflation is also true for other central banks, like the US Fed and the BOJ. In Japan, inflation has risen after a long time, and their withdrawal of accommodation—through rate hikes or reduced bond purchases—is a response to that higher in the US, we are seeing relatively strong economic growth, and inflation is not yet coming down to the Fed's target. This is why the Fed has not cut rates in the current calendar year, although they did cut rates last are waiting for more subdued inflation before embarking on another rate-cutting cycle. While the Fed is projecting more rate cuts ahead, we will have to wait and see how the growth-inflation dynamics evolve in developed to directly answer your question: every central bank is focused primarily on its domestic growth and inflation dynamics. While they are also monitoring geopolitical developments, those tend to take a foremost consideration in their monetary policy decisions is domestic demand and inflation trends. Kshitij Anand: Let us also get your viewpoint on what FPIs or FIIs are doing at this point in time. In fact, we are seeing FPIs continuing to sell Indian fixed income assets despite improved macro indicators. Could you shed some light on what's happening right now and how you are interpreting this trend? FPIs continued to sell Indian fixed income with more than US$2 bn of outflows in June. Puneet Pal: We have seen a decent amount of inflows in 2023 and 2024. In both these years, there have been significant inflows into fixed income from we talk about the last quarter, from April to June, we have seen some outflows. This could be a result of profit booking—taking some profits off the table—because we have witnessed decent returns from Indian fixed income assets over the past two instance, the 10-year benchmark yield has come down from a high of around 7.60% in 2022 to a low of around 6.25% just a fortnight ago. So, FPIs who have invested over the last two years have seen good returns on their portfolio could very well be a case of profit-taking, and also the fact that the US-India interest rate differential has narrowed, leading to some capital we believe it's more about profit booking rather than anything fundamentally concerning. As you rightly pointed out, our macro indicators continue to remain strong and stable. Going forward, we expect this stability to from a macroeconomic standpoint, India is in a sweet spot, and there's no reason for concern. It appears to be more of a tactical reallocation after a strong rally in Indian bonds over the last two years. Kshitij Anand: So, no red flags there for the Indian market? Puneet Pal: Yes. (Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
