Latest news with #AchinGoel


Mint
10-06-2025
- Business
- Mint
Nifty 50 to reach 26,600 level by 2025-end; IT among top sectors that can create wealth: Achin Goel, Bonanza Group
Expert View: Achin Goel, PMS Fund Manager at Bonanza Group, believes that Nifty 50 can reach at 26,600 level by the end of 2025, helped by 11% EPS growth in Nifty-50 constituent companies. Furthermore, he expects the FII to remain bullish on the Indian stock market as India's solid economic growth and ongoing reforms will mitigate geopolitical risks and maintain strong foreign investor interest. Edited excerpts: India's strong macroeconomic fundamentals are acting as a powerful tailwind for the equity markets. We're seeing a combination of high GDP growth, strong tax collections, manageable inflation, and consistent government capital expenditure—all of which are laying a solid foundation for sustainable earnings growth. From an investor's perspective, this kind of macro stability builds confidence. For example, a disciplined fiscal approach and RBI's measured monetary policy help keep inflation and interest rate volatility in check, which is crucial for long-term equity flows, especially from institutional investors. Moreover, the government's emphasis on infrastructure, manufacturing through PLI schemes and digital public infrastructure is accelerating a multi-sector capex cycle. This directly benefits sectors like capital goods, construction, banking and industrials. In addition, India's demographic dividend and rising middle class continue to support domestic consumption, which strengthens sectors such as FMCG, autos and retail. Put simply, strong macros don't just support the market—they help broaden the rally and deepen sectoral participation, making India one of the attractive investment destinations among emerging markets. The recent stellar run of the smallcap index, which has outperformed the Nifty 50 and large caps with gains like 6.87% in May 2025 and double-digit returns for many stocks, is driven by strong growth potential and renewed investor interest in sectors such as railways, defense, and financials. Smallcaps benefit from their higher growth prospects and are seen as attractive for medium-to long-term investors willing to tolerate higher risk. However, this rally comes amid significant challenges: Q4FY25 smallcap profits contracted by 19%, contrasting with midcap and largecap earnings growth. Earnings downgrades, government capex slowdowns, and sector-specific weaknesses—especially in cement, private banks, consumer, and auto sectors—have raised concerns about sustainability. Thus, while smallcaps offer compelling upside due to valuation discounts and sectoral tailwinds, the earnings misses and macro uncertainties warrant caution. Investors should balance the growth potential against heightened volatility and selectivity risks amid an uneven earnings backdrop. The outlook for Indian IT sector in FY26 appears challenging, primarily due to the impact of discretionary spending cuts in the US amid rising recessionary pressures. The US, which accounts for over half of India's US$190bn software exports, is experiencing a cautious consumer sentiment with many consumers planning to reduce spending on discretionary items. This cautiousness is exacerbated by tariffs imposed by the US administration, which have fueled inflation and heightened fears of a recession. Tariffs, which is not directly targeting IT services, but indirectly affect Indian IT companies as their clients in manufacturing, logistics and retail sectors face higher costs and uncertainty, leading to delayed projects and slower deal cycles. As a result, current scenario is marked by limited new outsourcing opportunities and pressure on margin due to pricing and limited rupee depreciation benefits. However, Indian IT companies specialising in AI, Gen AI and cloud services are poised for robust growth, driven by rapid digital transformation and increasing adoption of AI-as-a-Service and hybrid cloud models. US companies, facing recessionary pressures are intensifying cost optimization efforts by prioritizing scalable, efficient cloud solutions and AI deployments that reduce operational expenses while enhancing productivity. This focus on cost efficiency is influencing Indian IT firms to offer optimized cloud and AI services that align with US clients' budget-conscious strategies. Defence and railway stocks have shown a notable upward movement recently, fueled by strong government initiatives and strategic sectoral developments. Defence stocks are signaling a potential turnaround after previous corrections, supported by India's aggressive push for indigenisation and export growth. Further, Operation Sindoor has significantly boosted investor interest defence stocks, as some of the stocks rising up to 35% shortly after the conflict began. The surge reflects expectations of increased defence spending, replenishment of military inventories and export opportunities driven by India's demonstrated indigenous military strength and technological edge. Meanwhile, railway stocks also rallied strongly on the back of a significant capex push, with government budget allocations of Rs.2.62 lakh crore for railway capital spending in 2025–26 aimed at infrastructure upgrades and electrification projects. However, given the sustained government focus on modernization, 'Make in India' initiatives and technological adoption in both sectors, the upward trend appears poised to continue in the medium term, provided macroeconomic stability and policy continuity remain intact. The ₹ 43,400 crore promoter selloff in May warrants cautious interpretation rather than outright alarm. While the timing coincides with Nifty's 12% surge, this appears driven by liquidity dynamics rather than fundamental concerns. With FIIs and DIIs injecting Rs.80,000 crore, promoters are naturally stepping in to provide supply through block deals, as individual retail investors cannot facilitate large institutional purchases. However, the dichotomy between companies guiding strong growth while promoters dump shares at high valuations does raise questions about insider sentiment. Large-cap withdrawals such as InterGlobe ( ₹ 11,560 crore) and ITC-BAT ( ₹ 12,900 crore) may indicate portfolio rebalancing, while small and midcap promoter selling may be seen with caution and may warrant a deeper analysis. While not strictly a red warning, this pattern suggests that bulls should exercise greater caution given the current values. Many leading brokerages have recently upgraded their Nifty-50 target for the year 2025, reflecting a bullish outlook based on fundamental analysis. This optimism is driven by strong corporate earnings growth, robust economic indicators, and favourable monetary policy with 50bps rate cut by the RBI. FIIs have also turned net buyers amid a weakening dollar index and volatile US bond yields, further supporting market sentiment. On the above thesis, we are also expecting ~11% EPS growth in Nifty-50 constituent companies to reach to ~Rs.1,300 in FY26. On this basis, we are expecting Nifty-50 to reach at 26,600 level, a further upside of 6.5% by end of 2025. Foreign investors have shown renewed confidence in Indian markets, pumping in ₹ 4,223 crore in April followed by a record ₹ 19,860 crore in May 2025, marking the strongest inflows this year. This enthusiasm comes from a mix of positive factors: India's GDP growth surprised everyone with a strong 7.4% in the last quarter, the weakening US dollar made Indian assets more attractive and talks of a possible US–India trade deal have boosted long-term optimism. On top of that, policy changes like easing investment rules for Saudi Arabia's sovereign fund show India's commitment to welcoming foreign capital. While the near-term uncertainties such as geopolitical risks and rising US treasury yields may reverse this trend. However, India's solid economic growth and ongoing reforms will mitigate these risks and maintain strong foreign investor interest in the months ahead. Technology and IT services are top sectors for wealth creation, driven by digital transformation and AI adoption. Renewable energy and electric vehicles benefit from strong global sustainability trends and supportive policies. The pharmaceutical and healthcare sector offers consistent growth due to innovation and export opportunities. Infrastructure development is propelled by urbanization and government projects. Financial services and FinTech are growing through digital inclusion and financial deepening. Lastly, consumer goods thrive on rising middle-class consumption and rural market penetration. Diversifying across these sectors can help investors build and preserve wealth. As of early June 2025, the Indian rupee is stable, trading between ₹ 85.80 and ₹ 86 against the US dollar. It has strengthened slightly by 7 paise, helped by foreign money coming into the country and a soft approach by the RBI. The RBI surprised everyone by cutting the repo rate by 0.5% to 5.5%—its biggest cut in five years. It also reduced the CRR by 1%. This shows the RBI is confident because inflation in India has fallen to about 3.16% in May, which is low and manageable. A weaker US dollar, lower inflation in India, and cheaper oil prices have reduced India's import costs. This helps the economy since India imports a lot of oil and goods priced in dollars. Exporters, especially in IT and pharma, could benefit as their products become more competitive globally. However, their earnings in dollars may be worth less in rupees. Upcoming US job data could also affect how strong or weak the dollar remains and influence investment into countries like India. Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.


Mint
23-04-2025
- Business
- Mint
Expert view: Achin Goel of Bonanza on Q4 earnings, high-growth sectors, top stock picks
Expert view on Indian stock market: Achin Goel, Vice President at Bonanza Group, believes India's stable economic fundamentals and anticipated earnings growth may attract significant foreign investments. Goel is optimistic about the Indian stock market and said, in an interview with Mint, that after the recent correction, investors can enter fundamentally strong mid and small-cap stocks with a long-term view. Here are edited excerpts of the interview: Despite a temporary pause, uncertainty surrounding US President Donald Trump's tariffs continues to cast a shadow over Indian equity markets, creating volatility and investor anxiety. The imposition of reciprocal tariffs—26 per cent on Indian exports to the US triggered sharp declines in benchmark indices like the Sensex and Nifty 50. However, India's relatively lower tariff burden compared to China, combined with its strong domestic economy and ongoing trade negotiations, positions it advantageously to capture market share in the US, potentially boosting corporate earnings. To navigate these turbulent times, Indian equity investors should focus on diversification strategies, including stocks from sectors that are less dependent on exports, especially in the US, such as defence, renewable energy, manufacturing, consumer goods, etc. Additionally, investors are advised to adopt a long-term perspective, capitalising on lower valuations during market dips while staying informed about evolving trade policies and monetary measures like the RBI's rate cuts to support growth. This cautious yet proactive approach can help Indian investors mitigate risks and seize emerging opportunities amid tariff-induced uncertainty. The US-China trade war is expected to have several implications for the Indian equity market. Initial uncertainty had resulted in FPI outflows, but the market demonstrated strong resilience by rebounding and positioning itself as a safe haven. We expect a reversal in FPI outflows, driven by strong domestic growth and India emerging as a supply chain alternative to China. Further, India's less direct revenue exposure to the US than other Asian countries provides some insulation from the trade tensions. Besides initial concerns over stretched valuations and FPI outflows, India's stable economic fundamentals and anticipated earnings growth are expected to attract renewed investment. Compared to other emerging markets, India is well-positioned due to its strong economy and stable earnings, which will eventually bring back flows to the Indian equity market. Q4FY25 earnings season for Indian companies is expected to be largely muted, with earnings growth projected at a modest 2 per cent YoY for Nifty 50 companies. However, certain sectors and companies are poised for notable upgrades. Metals are expected to deliver a strong performance with earnings growth around 24 per cent YoY. At the same time, telecom may turn profitable after losses, and healthcare is forecasted to grow by 11 per cent YoY. Financials show a mixed picture with ICICI Bank reporting a robust 18 per cent YoY profit after tax growth in Q4, signalling strength in private banking, but private banks overall may see a 3 per cent earnings decline, PSU banks a slow 4 per cent growth and NBFCS a slight dip. While broad earnings growth remains subdued, sectors like metals, telecom, healthcare, select financials and logistics firms could drive some positive surprises in Q4FY25. We advise investors to focus on domestic themes that leverage the robust economic growth and government initiatives. Key sectors offering significant opportunities in 2025 include the electric vehicle (EV) industry, another high-growth area, supported by government incentives and projected to expand exponentially, particularly in two-wheelers and battery technology. Infrastructure remains a critical theme, backed by massive government projects like the National Infrastructure Pipeline and Smart Cities Mission, promising long-term stable returns. Additionally, real estate is gaining momentum due to urbanisation and demand for commercial spaces linked to IT and manufacturing growth. Renewable energy and healthcare also present attractive prospects amid rising consumer demand and policy support. After the recent US tariffs and the consequent market fall, investors can look for mid-cap and small-cap stocks, as after a sharp correction in early 2025, these segments have shown resilience and strong growth potential. After a period of decline, the Nifty Smallcap 250 and Midcap 150 indices are beginning to stabilise and even rally, led by interest of FIIs in mid and small-cap stocks, recognising their high growth prospects amid India's expanding economy. Mid and small caps have historically outperformed large caps, delivering annual returns of 16-19 per cent over the past decade, and current valuations have become more attractive after the recent correction. However, investors should be cautious and thoroughly research fundamentals, corporate governance and diversification. The current market falls, led by the US tariffs war, can be seen as an opportunity to enter into fundamentally strong mid and small-cap stocks with a long-term view. Top picks in the Indian financial sector for investment in 2025 include major private banks like HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank and public sector giants such as State Bank of India and Bank of Baroda. These banks boast healthy P/BV ratios and consistent growth, reflecting robust asset quality and improved balance sheets with NPAS at a 13-year low. Small finance banks like Utkarsh Small Finance Bank and Suryoday Small Finance Bank also present attractive growth potential due to their focus on underserved segments. In the NBFC space, Jio Financial Services stands out for its innovative approach targeting semi-urban and rural markets. The BFSI sector benefits from India's growing digital transactions, fintech adoption, and regulatory reforms, making it a key driver of economic growth with promising long-term stability and returns. Indian PSU stocks present a mixed yet promising opportunity at this juncture. Despite a weak FY25 where 73 per cent of PSU stocks fell, the segment has delivered strong multi-year returns, with the BSE PSU index up over 80 per cent in two years, driven by government capex and reforms in defence, power, and railways. Key PSU stocks like ONGC, trading at a low P/E of 7.9 with a 5 per cent dividend yield, and Power Grid, with a 3.5 per cent yield and expansion plans, remain attractive for income-focused investors. NTPC, with its renewable energy push and a lower multiple of 16.2, also offers growth potential. Defence PSUs such as Hindustan Aeronautics and Bharat Electronics show strong fundamentals and robust profit growth, making them good long-term bets. India's medium-term alpha generation prospects lie prominently in domestic consumption-focused sectors like private sector banks, electric vehicles (EV), renewable energy, healthcare, insurance, chemicals, defence, electronics manufacturing services and infrastructure. Private sector banks are expected to generate significant alpha in 2025 due to improving asset quality and growth potential. The EV sector is booming, driven by government incentives and a projected CAGR of over 66 per cent, making it a key growth area. With India ranking fourth globally and ambitious capacity targets, renewable energy offers strong investment opportunities supported by government policies. The healthcare and insurance sectors are expanding rapidly. The healthcare market size is expected to nearly double by 2028, and insurance penetration is rising. Chemicals, defence, and electronics manufacturing services are also poised for growth despite high valuations, supported by scalability and government focus. Infrastructure, backed by massive government spending through initiatives like the National Infrastructure Pipeline and Gati Shakti, remains a stable long-term investment opportunity. India's growth-inflation dynamics in FY26 are expected to reflect a moderate yet resilient expansion amid global uncertainties. The RBI projects real GDP growth at 6.7 per cent, supported by strong household consumption, a robust industrial recovery and favourable agricultural output, particularly the Rabi crop. We expect a revival in capex expenditure due to higher capacity utilisation and government capital investment. Inflation is forecasted to moderate to around 4.8 per cent for FY26 and further ease to 4.4 per cent by Q4, driven by softening food prices and stable energy costs, assuming a normal monsoon. However, risks remain from global geopolitical tensions, tariff wars and commodity price volatility. Overall, we expect India's economy to be poised for balanced growth with controlled inflation, benefiting from supportive fiscal and monetary policies, structural reforms, and resilient domestic demand despite external headwinds. Read all market-related news here Read more stories by Nishant Kumar Disclaimer: This story is for educational purposes only. The views and recommendations above are those of the expert, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary. First Published: 23 Apr 2025, 01:06 PM IST