Edited excerpts from a chat:
As we head into the Union Funds amid heightened market volatility and chronic world uncertainties, what’s the Avenue’s expectation from the finance minister?
The expectation is for steadiness and continuity. Markets would really like the Funds to maintain supporting progress by infrastructure and capital spending, whereas staying firmly dedicated to fiscal self-discipline. A secure and predictable tax framework, together with focused help for MSMEs and consumption, may help reinforce confidence. In a unstable world atmosphere, clear steerage on the fiscal deficit trajectory and ease of doing enterprise will matter greater than big-ticket bulletins.From a market standpoint, what particular coverage measures or fiscal alerts can be most constructive for equities – whether or not on capex push, consumption help, or fiscal consolidation?
From a market perspective, readability and consistency will matter most. A continued however measured push on infrastructure and green-energy capex may help encourage personal funding. On the identical time, a transparent and credible path for fiscal consolidation will present consolation on valuations. Calibrated disinvestment and focused measures for manufacturing can drive progress with out straining public funds — and that steadiness is what markets are in search of.
Ought to the federal government incentivise FIIs with some tax sops?
Stability issues greater than sops. Whereas rationalising points of the capital good points framework and bettering readability round taxation may assist sentiment, FIIs primarily reply to progress visibility, coverage consistency, and foreign money stability. If the Funds reinforces these fundamentals, flows will comply with. Any incentives, if thought-about, must be measured and aligned with India’s long-term competitiveness slightly than short-term flows.
Funds has been historically seen as a set off for PSUs, rail, infra and defence sectors. Do you see a shopping for alternative in any of the pockets earlier than the Funds?
There might be selective alternatives, however this isn’t a time for blanket positioning. Rail and defence proceed to profit from sturdy order visibility and coverage help, which provides some consolation on fundamentals. Nevertheless, in PSUs and broader infrastructure, valuations already replicate lots of optimism. Buyers ought to keep selective and deal with execution energy slightly than the Funds headline.Within the final 12 months, we’ve got seen a transparent shift of focus from capex to consumption. How do you see capex-related performs going ahead?
The shift is extra about rebalancing than abandoning capex. Consumption help has change into mandatory after a protracted investment-led cycle, however capital spending stays an necessary progress pillar. Going ahead, capex alternatives will probably be extra selective — targeted on sectors and corporations with clear demand visibility and powerful steadiness sheets, slightly than broad-based cyclical performs.
Are there particular sectors or themes the place earnings visibility and balance-sheet energy are sturdy sufficient to resist near-term volatility, no matter Funds outcomes?
Sure, and I consider these are largely pushed by fundamentals slightly than coverage occasions. Effectively-capitalised personal banks inside BFSI, choose consumption names with pricing energy, healthcare, and defence corporations with long-term order books supply comparatively higher earnings visibility. These sectors are likely to navigate near-term volatility extra comfortably as a result of execution and balance-sheet energy matter greater than Funds outcomes.
Small- and mid-cap shares have corrected sharply. Is that this a chance or is additional consolidation wanted?
The correction has improved risk-reward in elements of the mid- and small-cap area, however selectivity is vital. Whereas valuations have cooled, many shares are nonetheless priced for perfection. A phased strategy is smart — specializing in high-quality companies the place earnings can catch up over time, slightly than aggressive, broad-based publicity.
Which sectors are finest positioned to drive incremental earnings progress in FY26 and FY27?
Earnings progress over the following two years is more likely to be led by a mixture of cyclical restoration and structural themes. Banking and financials, autos, cement, telecom, choose consumption performs, and infrastructure-linked sectors are properly positioned. What is going to differentiate efficiency is balance-sheet energy and the power to transform demand into sustained earnings progress.
