Midcaps, Smallcaps, and IT appear overheated as valuations stretch, says Ram Medury, Maxiom Wealth
After a sharp rally in Indian equities, concerns are mounting over stretched
valuations
in certain pockets of the market.
In this edition of
ETMarkets Smart Talk
,
Ram Medury
, Founder and CEO of
Maxiom Wealth
, shares his cautious view on midcaps, smallcaps, and the IT sector, which he believes are beginning to look overheated.
While the broader market outlook remains constructive for the second half of 2025, Medury advises investors to tread carefully in segments that have run up too fast, too soon.
He also offers insights into sectoral opportunities, asset allocation post the
RBI
's rate cut, and the impact of global geopolitical and trade risks on Indian equities. Edited Excerpts –
Q) Thanks for taking the time out. June is turning out to be a volatile month for D-Street. How is 2H2025 likely to pan out for Indian markets? Do you think most of the negatives are behind us?
by Taboola
by Taboola
Sponsored Links
Sponsored Links
Promoted Links
Promoted Links
You May Like
Elegant New Scooters For Seniors In 2024: The Prices May Surprise You
Mobility Scooter | Search Ads
Learn More
Undo
A) We expect good rainfall in the upcoming monsoon period which may increase the earnings of 10-15% for agriculture-based stocks and also will help in reducing inflation at the base level. With the recent RBI rate cuts we assume a stable low inflation outlook but the global geopolitical scenario has changed quickly.
As a large part of India's inflation is linked with crude oil we do have at least one negative ahead of us as oil price climbs.
Overall, with increased spending on Infra by the government, the growth rate of the organised sector is expected to improve in H2.
Live Events
Q) What does a 50 bps cut mean for equity and bond markets? What should be an asset allocation strategy?
A) A 50 bps rate cut by the RBI makes borrowing cheaper, boosting liquidity and supporting growth, which is positive for both equity and bond markets.
In the current Indian scenario, rate-sensitive sectors like banks, autos, and real estate may see strong equity gains, while long-duration bonds are likely to rally as yields fall.
Post the rate cut, Investors can consider increasing exposure to good quality stocks and on the fixed income side in Short duration/Accrual funds. A small allocation to gold can act as a hedge against potential inflation post recent geopolitical events.
Q) What is your take on Q4 earnings from India Inc.? Any hits and misses which you tracked in the results?
A) In the quarter ending Mar'25, YoY sales growth held steady near 9%, reflecting sustained business momentum. However, YoY PAT growth dropped to around 10% from nearly 17% in the previous quarter which can be counted as a 'miss'.
Aggregate profit margins improved to 10%, returning to their recent peak. This would be a 'hit' as the trend continued for two consecutive quarters, indicating better operational efficiency in corporate India given the backdrop that both sales and profit growth receded from the prior quarter.
Q)
Nifty Bank
hit a record high in June which suggests that there is a lot of interest in banking stocks. What is fuelling the rally in financials – is it the rate cut by RBI?
A) The rate cut of RBI by 50 bps and CRR cut of 100 bps is expected to unlock 2.5 lakh crore for banks by Dec 25.
This extra liquidity will help the banks in more disbursal and thereby improving their bottom-line and topline.
The recent corrective measures by RBI to monitor MFI and unsecured lending as also result in lowering of distressed assets in big financial institutions which has also improved the overall health of banks' Balance Sheets.
Q) Which sectors are likely to remain in limelight in the 2H2025?
A) Banks and NBFCs would do well as a direct impact of the rate cut. The consumer durables sector is also expected to have a good run with increasing disposable income and increasing exports.
With many of the consumer durables now working with MNCs to manufacture their products, there is room for growth in this sector. Defence is another sector that would do well given the geopolitical turbulence.
Q) The tonality keeps changing from the US when it comes to 'Trade Talks'. Do you think it is still a relevant headwind for equity markets across the globe?
A) The markets seem to be now shrugging off the initial apprehensions of tariff tantrums. US markets initially plunged after the new tariffs were announced in April 2025, with the S&P 500 falling nearly 15% at its lowest point.
After a pause in tariff escalation and some policy walk-backs, markets rebounded, and the S&P 500 and
Nasdaq
are now modestly above where they started the year, while the Dow Jones remains slightly negative year-to-date.
Despite the recovery, as of mid-June 2025, US markets have not fully regained their pre-tariff highs and remain volatile due to ongoing trade tensions and global uncertainties.
Meanwhile, Indian markets have significantly outperformed US indices in the same period, reaching new highs and showing resilience despite global trade tensions and the US tariff shock. India has low trade exposure with the US if we consider direct import and export.
But with the US tariff risk, comes global tariff risk which may impact the demand of Indian goods outside as competition intensifies. With the India US trade deal in talks and major new announcements coming up, we can expect India to be a beneficiary in few of the sectors like Auto Ancillaries and Electronics.
Q) China equity markets are up in double digits while we have underperformed most EM peers. Does it make a case for global diversification?
A) China's economy is growing at 5.4% but facing demographic and regulatory headwinds. While it holds strategic power in rare earths and currency innovation, export models are under strain.
Its market remains undervalued, needing global trust to re-rate. Challenges loom, but scale and influence remain formidable on the world stage.
Also, there is a lot of geopolitical tension all over the world, with three international borders on the boil, a lot of volatility is expected in all the major economies.
Q) Which sector(s) is/are looking overheated and why?
A) India's stock market rally has been broad-based, but concerns of overheating are rising in midcaps, smallcaps, IT and cyclical sectors like realty and metals.
Valuations are appearing stretched, especially in mid and smallcaps, driven by strong retail inflows. IT is facing global demand and macroeconomic headwinds.
The automobile sector, especially OEMs could be subdued this year, as the growth rate may be slower due to the high base last year. Despite gains, realty and metal sectors remain vulnerable to interest rate or commodity price shifts.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
29 minutes ago
- Time of India
Watch: Rishi Sunak explains how following Dharma helped him become first Hindu UK PM
In a rare joint address that felt more like a fireside conversation than a commencement speech, former UK Prime Minister Rishi Sunak and his wife, investor-philanthropist Akshata Murthy, took the stage at Stanford's Graduate School of Business (GSB) to reflect on leadership, life, and the Eastern values that have guided them through power, politics, and parenthood. But it was one ancient Sanskrit word— Dharma —that became the philosophical cornerstone of their address to the Class of 2025. 'It's a concept known in Sanskrit as Dharma,' Sunak explained. 'The idea that we should gain our fulfilment from simply doing our personal duty, rather than from any rewards that may come with our efforts.' It was not just an abstract idea. Sunak revealed that Dharma was the principle that guided his decision to step into the chaos of British politics in 2022—after losing the Conservative Party leadership race, only to return weeks later as Prime Minister following Liz Truss's resignation and a market meltdown. 'At that point,' Sunak recalled, 'a purely ambitious politician would have sat out the impossible situation. But Akshata reminded me: my Dharma was clear.' That invocation of duty over ambition—a far cry from the usual Machiavellian fare of Westminster—drew warm applause from the GSB audience. For a school known for producing Silicon Valley unicorns and global CEOs, the speech was a gentle, unexpected reorientation: success isn't just about spreadsheets, scalability, and shareholder value. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Trading CFD dengan Teknologi dan Kecepatan Lebih Baik IC Markets Mendaftar Undo Sometimes, it's about doing the right thing, even when it costs you. A Love Story in the Schwab Courtyard The speech was also deeply personal. Akshata and Rishi, both graduates of Stanford GSB's Class of 2006, met during their time on campus. 'This is literally where we met,' Murthy told the audience. 'In the Schwab courtyard, to be precise.' Their anecdotes—him in 'seriously uncool' cargo shorts, her dragging him along on runs—were a charming counterpoint to their more weighty themes. But even those early conversations, they said, were seeded with discussions about leadership, values, and Dharma. 'We started talking about this idea without knowing it,' Murthy said. 'At Arbuckle Café over breakfast… and whether 11am was too early for some ice cream for Rishi.' From Omicron to Om Sunak drew on his COVID-era experience as Chancellor of the Exchequer to drive home a broader point: while data was critical, instinct—rooted in values—was what made the difference. 'I used to find comfort in the idea that data could always provide a certain answer,' Sunak said. 'But Akshata helped me see that data can't look around corners. It can't make the decision for you.' It was a lesson, he said, that helped him resist pressure for a second national lockdown in late 2021, when the Omicron variant emerged. While the experts were divided, Sunak trusted his intuition—and ultimately, his duty to protect not just lives, but livelihoods. Dharma for the Next Generation The concept of Dharma wasn't just for prime ministers. Murthy extended it to young people, particularly through initiatives like Lessons at 10 and The Richmond Project, both aimed at increasing youth numeracy and life skills across the UK. 'Successes and failures are part of the package that comes with leadership,' she said. 'Dharma isn't just relevant in public service… it gives you the resilience and clarity to overcome whatever's thrown at you without losing your way. ' The GSB audience—diverse, ambitious, and often torn between idealism and practicality—was urged to embrace the same principle. Not to obsess over outcomes, but to anchor themselves in purpose. 'If you want to lead,' said Sunak, 'it's not a question of data or intuition. You've got to get comfortable with both.' An Indian Ethos in Global Power Data, Dreams and Dharma: Stanford GSB Commencement Speech 2025 That both Sunak and Murthy come from families steeped in Indian values added an additional layer to the message. As the daughter of Infosys founder Narayana Murthy, and as Britain's first Indian-origin prime minister, they embodied a fusion of East and West, Silicon Valley and Westminster, tradition and modernity. In invoking Dharma, they weren't just quoting a Sanskrit term—they were redefining global leadership with it. For a generation of graduates who will face climate breakdowns, AI disruption, political upheavals and moral dilemmas far more complex than case studies can capture, the message resonated: Don't just optimise. Do your duty. Whether it's in public service, entrepreneurship, or social impact, the world, they said, needs more leaders shaped not just by capital markets—but by Dharma. As the applause rang out and the tassels turned, Rishi and Akshata Murthy left the GSB stage not as power couple or policy wonks, but as philosopher-guides—reminding the next generation that greatness isn't just built on ambition or data, but something older, deeper, and infinitely more enduring. A sense of duty. Or as the Bhagavad Gita would put it: 'Karmanye vadhikaraste ma phaleshu kadachana' — 'You have the right to perform your duty, but not to the fruits of your actions.' That, perhaps, is the ultimate graduation gift.
Fashion Value Chain
29 minutes ago
- Fashion Value Chain
Butterfly Unveils a Bold New Identity That Celebrates Change and Champions the Original You
Butterfly, one of India's most trusted kitchen appliance brands, is turning a new page. With a refreshed brand identity, a renewed purpose, and a sharper understanding of today's ever-evolving consumer. Butterfly New Logo At the heart of this refresh is a symbol as timeless as it is transformative-the fingerprint. Merging beautifully into the wings of a butterfly, the evolved icon reflects the brand's core belief: that while life changes, one's essence remains. It is this personal imprint-one's way of thinking, cooking, creating, and living-that Butterfly now celebrates. This new era of Butterfly speaks directly to consumers with a 'zillenial' attitude to life-self-aware individuals who embrace transformation while staying rooted in who they are. For them, change is constant-but authenticity is non-negotiable. The brand aims to focus not on age, but on attitude by moving beyond demographics to psychographics-because a zillenial mindset isn't defined by numbers, borders or genders but by how one embraces change. Butterfly's refreshed positioning, 'Celebrating Change', reflects a deep understanding of modern Indian homes, where shifting roles, hybrid lifestyles, and tech-integrated living are the norm. As a subsidiary of Crompton, one of India's leading names in home solutions, Butterfly is now equipped to bring intuitive and purposeful innovations that transform everyday experiences in the kitchen and beyond. 'For over 40 years, Butterfly has been a part of millions of kitchens across India. Today, as homes become more fluid and identities more self-defined, our new identity reflects not just who we are-but who we're here for,' said Swetha Sagar, Chief Business Officer, Butterfly. The new Butterfly logo is more than just a symbol-it's the mark of millions of consumers, retailers, dealers, employees and designers who are making the Butterfly products. Crafted from the distinct swirls of a fingerprint, the wings of the butterfly now carry the story of every individual it touches. It's a tribute to the idea that no matter how much life shifts, one's identity leaves a mark-on choices, kitchen and the everyday rhythm. 'This is more than a rebrand. It's a reimagining of what it means to belong in a modern Indian kitchen. Butterfly is for the originals. The ones who grow, shift, and adapt, but never lose the essence of who they are.' she said. From mixer grinders to cooktops, Butterfly's product range is undergoing a transformation across categories-designed to be more intuitive, durable, and design-forward, catering to the changing rhythms of contemporary households. The brand's commitment remains the same: to improve everyday life by providing intelligent solutions that understand and evolve with the consumers. About Butterfly Gandhimathi Appliances Ltd. 'Butterfly' is amongst the Top 3 Brands in India in kitchen and small domestic appliances. It is a reputed brand with high consumer recall in South, known for Aesthetics and Product Quality. It has diverse product portfolio, with variants adapted to meeting consumer needs. It has 4 core products – Mixer Grinders, Pressure Cookers, Gas Stove, Wet Grinders and backed by a full suite of small domestic appliances. It has state of art in-house manufacturing setup with strong backward integration.
Time of India
31 minutes ago
- Time of India
Strait of Hormuz blockade looms: Asian countries most vulnerable to Iran's trump card
Around 84 percent of oil passing through the Strait of Hormuz is destined for Asia, leaving the economies of China, India, South Korea and others vulnerable should Iran blockade the crucial trading route over US strikes on its nuclear sites. Around 14.2 million barrels of crude oil and 5.9 million barrels of other petroleum products pass through the strait per day -- representing around 20 percent of global production in the first quarter, according to the US Energy Information Administration (EIA). And crude oil from Saudi Arabia, the UAE, Iraq, Kuwait, Qatar and Iran almost exclusively passes through the corridor. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Your IQ Is 140 If You Can Answer 10 Of These Questions Correctly IQ International Undo Here are the main Asian countries where oil exported via the strait is destined: China More than half of the oil imported by East Asia passes through the Strait of Hormuz, experts estimate. Live Events China is one of the largest buyers, importing 5.4 million barrels of crude oil a day through Hormuz in the first quarter this year, according to the EIA. Saudi Arabia is China's second-largest supplier of crude oil, accounting for 15 percent of its total oil imports -- 1.6 million barrels a day. China also buys more than 90 percent of Iran's oil exports, according to the analysis firm Kpler. It imported 1.3 million barrels of Iranian crude oil a day in April, down from a five-month high in March. India India is highly dependent on the Strait of Hormuz, importing 2.1 million barrels of crude a day through the corridor in the first quarter, EIA data shows. Around 53 percent of India's imported oil in early 2025 came from Middle Eastern suppliers, particularly Iraq and Saudi Arabia, local media reported. Also Read: India safe from Strait of Hormuz closure due to diversified oil imports, says Hardeep Singh Puri Wary of an escalating conflict in the Middle East, New Delhi has increased its imports of Russian oil over the past three years. "We have been closely monitoring the evolving geopolitical situation in the Middle East since the past two weeks," India's Minister of Petroleum and Natural Gas Hardeep Singh Puri said on Sunday. "We have diversified our supplies in the past few years and a large volume of our supplies do not come through the Strait of Hormuz now," he wrote on X, adding "We will take all necessary steps to ensure stability of supplies of fuel to our citizens." South Korea Around 68 percent of South Korea's crude oil imports pass through the Strait of Hormuz -- 1.7 million barrels a day this year, according to the EIA. South Korea is particularly dependent on its main supplier Saudi Arabia, which last year accounted for a third of its oil imports. Seoul's trade and energy ministry said there have been "no disruptions so far in South Korea's crude oil and LNG imports" but "given the possibility of a supply crisis", officials were "planning for potential disruptions in the Strait of Hormuz". "The government and industry stakeholders have prepared for emergencies by maintaining a strategic petroleum reserve equivalent to about 200 days of supply," the ministry said in a statement. Japan Japan imports 1.6 million barrels of crude oil a day through the Strait of Hormuz, the EIA says. Japanese customs data showed 95 percent of crude oil imports last year came from the Middle East. The country's energy freight companies are readying for a potential blockade of the strait. "We're currently taking measures to shorten as much as possible the time spent by our vessels in the Gulf," shipping giant Mitsui OSK told AFP. Others Around 2 million barrels of crude oil passing through the Strait of Hormuz each day in the first quarter were destined for other parts of Asia -- particularly Thailand and the Philippines -- as well as Europe (0.5 million barrels) and the United States (0.4 million barrels). Limited alternatives Asian countries could diversify their oil suppliers, but it is difficult to replace the large volumes coming from the Middle East. In the short term, "elevated global oil inventories, OPEC+'s available spare capacity, and US shale production all could provide some buffer", experts at MUFG Bank said. "However, a full closure of the Hormuz Strait would still impact on the accessibility of a major part of this spare production capacity concentrated in the Persian Gulf," they said. Saudi Arabia and the UAE have infrastructure to bypass the strait, potentially mitigating disruptions, but their transit capacity remains very limited -- around 2.6 million barrels a day. And the Goreh-Jask pipeline built by Iran to export via the Gulf of Oman, which has been inactive since last year, has a maximum capacity of only 300,000 barrels per day, according to the EIA.
