Latest news with #TrideepBhattacharya
Economic Times
7 days ago
- Business
- Economic Times
Trideep Bhattacharya on where he sees value and sectors that may see outperformance in future
Trideep Bhattacharya, Chief Investment Officer-Equities, Edelweiss MF, says India's consumption is expected to rebound in the second half of FY26. Factors like easing inflation, strong monsoons, and salary hikes will boost rural demand. Government spending on infrastructure, defence, and railways is also set to rise. IT services are a tactical bet due to reasonable expectations and improving macro a trade deal with US materializes by early July, IT services and chemicals are poised for relative outperformance. A low-probability, high-tariff scenario could severely impact the US and global economic growth, though markets aren't currently pricing in this risk. ADVERTISEMENT The way macroeconomics is shaping up, if you look at the global headwinds, whether it is in terms of the geopolitical tensions or the rising crude, how do you see India vis-à-vis the rest of the world because as far as India is concerned, the good part has been priced in. In the near term, do you see some bit of consolidation happening and going forward, how do you see the Indian markets play out? Trideep Bhattacharya: There are two or three parts to your question. First of all, amidst global volatility overall, when you look at the maximum amount of volatility or uncertainty, it was the beginning of the year when we did not know how India is going to be affected, what Trump's plans would have been, and also earnings were weak. ETMarkets Smart Talk | 2H2025 market returns may moderate, but India's long-term story intact: Abhiram Eleswarapu So, from that perspective, at the moment the macros are a little less volatile than where they were and the market rise seems to factor that in. But as you rightly pointed out, the markets have rallied close to September 24 highs and one of our hypotheses on the markets is that earnings-wise we would probably see earnings come back in the second half of FY26. So, over the next few months, markets being very close to September 24 highs, we would expect a bit of time correction in the markets to happen given that markets are in and around fair value. With regards to India, on a relative basis, we score quite well relative to other emerging market nations and also globally because A) our growth is the strongest and B) the texture of the growth is more domestic dependent than export dependent in circumstances where almost all the global economies are looking to find, to make in their own country a version of whatever goods and services they can and put tariffs on others. This particular growth metric where growth is driven by domestic earnings scores quite well and hence relatively, we would continue to be favourites of FIIs over a period of time, like we have seen since the beginning of this year. In terms of your sector preferences, oil and gas is one space where you are not very bullish in terms of your allocations as well. But oil is the biggest talking point right now with respect to what has been happening with Iran and Israel. Back home in terms of stock preferences, how do you see the space evolving? Yes, oil is giving jitters in the short term. How do you see the movement in the oil impacting various sectors and within the oil and gas space, there are subsegments as well. Are you bullish on any particular theme if at all? Trideep Bhattacharya: At the end of the day, from the beginning of this year till now, crude oil has come down from $85 to hit a bottom of $65 and now we are hovering between around $70. Net-net, so far, oil has corrected and that is positive for India economy on a net-net basis. Yes, recently we have seen a bit of a spike, but I would call that rise as being more in the range of $65-75 is where I would expect to remain. ADVERTISEMENT On the outside, if it touches or crosses $90 per barrel, I would be worried. But the chances of that happening are fairly limited given that there would be shale gas and also OPEC production coming to rescue. Second, we are a big importer of oil as an economy, and in that context, oil prices going up can cause a little of volatility but as long as it is within the range of $65-75, we do not see it as too much of a concern from a fundamental standpoint. Third, in the context of where we are placed within oil, we are more positive upstream over the last couple of months since the oil price has corrected quite meaningfully to $65 and that has helped us during this period of oil price rise. But net-net, compared to other sectors, we would bet on that part of the economy which uses oil as an input and churns out output because quite a few of the incentives being doled out either by the macro conditions or by the government act in their favour like consumption. So, we would be betting on the other side. But within oil and gas as a sector, we would rely on stock selection to carry us through. ADVERTISEMENT Talk to us about the other pockets where you see value. The common consensus, of course, is in favour of the financial, especially the NBFC space and as I can see, you are positive on NBFCs as well. But besides that ,talk to us about the sectors where you see value. Trideep Bhattacharya: If I were to look at two or three things which have happened in the context of India which are genuinely positive and play out over the back half of this year, one is basically a resumption of consumption based recovery and there certainly we do see pockets where a rebound is imminent. Very clearly one is crude oil and we discussed it at length as to the implications of the same. But secondly, inflation as you were talking earlier in the show, has come off quite meaningfully by 100 basis points and more that certainly is a boost for the rural economy. Also, monsoons being 6% higher than long period average also will act as a boom for rural consumption. ADVERTISEMENT Finally, in the budget, the honourable finance minister effectively gave a salary hike of 5% to 7% which will play out this festive season and onwards. Net-net, if you look at all the catalysts that are lined up in front of us, I would say consumption as a sector would see quite a few things going for them as we go toward the second half of FY26. The second theme that we like in the context of current times is resumption of government spending. Almost one-and-a-half years we spent where hardly any economic decision-making really happened. But since the beginning of this year, we have seen a meaningful amount of contracts being signed and more likely to come through in the areas of infrastructure, defence, railways, and the likes of it, which will play out in the form of earnings as we start from the second half of FY26 onwards. So, these are two themes which would carry on the earnings battle in the second half of FY26 which is what we are positive on. Those would be the sectors that are good to go. The third area is IT services. It is more tactical in nature, more because expectations are very reasonable at the moment. While earnings will be a little bit languishing, a year from now, earnings outlook will start to look better and macro conditions will ease out. So, these three are the areas that we are betting on in our portfolios. ADVERTISEMENT But other than that, apart from earnings, the other biggest talking point is what will happen to the trade talks and where is India placed with respect to the negotiations that are already underway? Is it time to once again look out for some of those globally linked sectors like pharma, chemical, or some of the other sectors where India has good exposure? Trideep Bhattacharya: IT services and chemicals would be two such pockets where from a near-term perspective we would be relatively more positive assuming a deal gets done. Now, in all honesty, in what shape and form the deal will get done is unknowable. But what we know is that business conditions tend to take precedence particularly in an economy like that of the US and we would probably have the first contours of a deal as we head towards the first deadline which is July 1st week. Assuming that happens, the two sectors that we like would probably kind of do better than others on a relative basis. I would also like to point out the other side which is a low probability event, but in case the tariff situation is kind of really the area where US kind of wants to implement high tariffs for the rest of the globe, then the biggest impact would be negatively on United States and globally we would be staring at fairly dire conditions from an economic growth standpoint towards the second half of this year. However, that is a three-sigma event that is a risk which I do not think at the moment markets are factoring in. At the same time, it is a low probability event and hopefully better sense prevails in the first week of July and that is what we are hoping for. We are bracing up for some sort of volatility in and around that date to see this through. (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
7 days ago
- Business
- Time of India
Trideep Bhattacharya on where he sees value and sectors that may see outperformance in future
Trideep Bhattacharya , Chief Investment Officer-Equities, Edelweiss MF , says India's consumption is expected to rebound in the second half of FY26. Factors like easing inflation, strong monsoons, and salary hikes will boost rural demand. Government spending on infrastructure, defence, and railways is also set to rise. IT services are a tactical bet due to reasonable expectations and improving macro conditions. Assuming a trade deal with US materializes by early July, IT services and chemicals are poised for relative outperformance. A low-probability, high-tariff scenario could severely impact the US and global economic growth, though markets aren't currently pricing in this risk. The way macroeconomics is shaping up, if you look at the global headwinds, whether it is in terms of the geopolitical tensions or the rising crude, how do you see India vis-à-vis the rest of the world because as far as India is concerned, the good part has been priced in. In the near term, do you see some bit of consolidation happening and going forward, how do you see the Indian markets play out? Trideep Bhattacharya : There are two or three parts to your question. First of all, amidst global volatility overall, when you look at the maximum amount of volatility or uncertainty, it was the beginning of the year when we did not know how India is going to be affected, what Trump's plans would have been, and also earnings were weak. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Here Are The New Kitchen Trends In 2025 (Click Here To Watch) Kitchen Remodeling | Search Ads Search Now Undo So, from that perspective, at the moment the macros are a little less volatile than where they were and the market rise seems to factor that in. But as you rightly pointed out, the markets have rallied close to September 24 highs and one of our hypotheses on the markets is that earnings-wise we would probably see earnings come back in the second half of FY26. So, over the next few months, markets being very close to September 24 highs, we would expect a bit of time correction in the markets to happen given that markets are in and around fair value. With regards to India, on a relative basis, we score quite well relative to other emerging market nations and also globally because A) our growth is the strongest and B) the texture of the growth is more domestic dependent than export dependent in circumstances where almost all the global economies are looking to find, to make in their own country a version of whatever goods and services they can and put tariffs on others. This particular growth metric where growth is driven by domestic earnings scores quite well and hence relatively, we would continue to be favourites of FIIs over a period of time, like we have seen since the beginning of this year. Live Events You Might Also Like: Good news getting priced in faster, narrow range consolidation likely in medium term: Siddharth Vora In terms of your sector preferences, oil and gas is one space where you are not very bullish in terms of your allocations as well. But oil is the biggest talking point right now with respect to what has been happening with Iran and Israel. Back home in terms of stock preferences, how do you see the space evolving? Yes, oil is giving jitters in the short term. How do you see the movement in the oil impacting various sectors and within the oil and gas space, there are subsegments as well. Are you bullish on any particular theme if at all? Trideep Bhattacharya: At the end of the day, from the beginning of this year till now, crude oil has come down from $85 to hit a bottom of $65 and now we are hovering between around $70. Net-net, so far, oil has corrected and that is positive for India economy on a net-net basis. Yes, recently we have seen a bit of a spike, but I would call that rise as being more in the range of $65-75 is where I would expect to remain. On the outside, if it touches or crosses $90 per barrel, I would be worried. But the chances of that happening are fairly limited given that there would be shale gas and also OPEC production coming to rescue. Second, we are a big importer of oil as an economy, and in that context, oil prices going up can cause a little of volatility but as long as it is within the range of $65-75, we do not see it as too much of a concern from a fundamental standpoint. Third, in the context of where we are placed within oil, we are more positive upstream over the last couple of months since the oil price has corrected quite meaningfully to $65 and that has helped us during this period of oil price rise. But net-net, compared to other sectors, we would bet on that part of the economy which uses oil as an input and churns out output because quite a few of the incentives being doled out either by the macro conditions or by the government act in their favour like consumption. So, we would be betting on the other side. But within oil and gas as a sector, we would rely on stock selection to carry us through. Talk to us about the other pockets where you see value. The common consensus, of course, is in favour of the financial, especially the NBFC space and as I can see, you are positive on NBFCs as well. But besides that ,talk to us about the sectors where you see value. Trideep Bhattacharya: If I were to look at two or three things which have happened in the context of India which are genuinely positive and play out over the back half of this year, one is basically a resumption of consumption based recovery and there certainly we do see pockets where a rebound is imminent. You Might Also Like: ETMarkets Smart Talk | 2H2025 market returns may moderate, but India's long-term story intact: Abhiram Eleswarapu Very clearly one is crude oil and we discussed it at length as to the implications of the same. But secondly, inflation as you were talking earlier in the show, has come off quite meaningfully by 100 basis points and more that certainly is a boost for the rural economy. Also, monsoons being 6% higher than long period average also will act as a boom for rural consumption. Finally, in the budget, the honourable finance minister effectively gave a salary hike of 5% to 7% which will play out this festive season and onwards. Net-net, if you look at all the catalysts that are lined up in front of us, I would say consumption as a sector would see quite a few things going for them as we go toward the second half of FY26. The second theme that we like in the context of current times is resumption of government spending. Almost one-and-a-half years we spent where hardly any economic decision-making really happened. But since the beginning of this year, we have seen a meaningful amount of contracts being signed and more likely to come through in the areas of infrastructure, defence, railways, and the likes of it, which will play out in the form of earnings as we start from the second half of FY26 onwards. So, these are two themes which would carry on the earnings battle in the second half of FY26 which is what we are positive on. Those would be the sectors that are good to go. The third area is IT services. It is more tactical in nature, more because expectations are very reasonable at the moment. While earnings will be a little bit languishing, a year from now, earnings outlook will start to look better and macro conditions will ease out. So, these three are the areas that we are betting on in our portfolios. You Might Also Like: Oil stocks in focus as escalating Israel-Iran conflict fuels supply disruption fears But other than that, apart from earnings, the other biggest talking point is what will happen to the trade talks and where is India placed with respect to the negotiations that are already underway? Is it time to once again look out for some of those globally linked sectors like pharma, chemical, or some of the other sectors where India has good exposure? Trideep Bhattacharya: IT services and chemicals would be two such pockets where from a near-term perspective we would be relatively more positive assuming a deal gets done. Now, in all honesty, in what shape and form the deal will get done is unknowable. But what we know is that business conditions tend to take precedence particularly in an economy like that of the US and we would probably have the first contours of a deal as we head towards the first deadline which is July 1st week. Assuming that happens, the two sectors that we like would probably kind of do better than others on a relative basis. I would also like to point out the other side which is a low probability event, but in case the tariff situation is kind of really the area where US kind of wants to implement high tariffs for the rest of the globe, then the biggest impact would be negatively on United States and globally we would be staring at fairly dire conditions from an economic growth standpoint towards the second half of this year. However, that is a three-sigma event that is a risk which I do not think at the moment markets are factoring in. At the same time, it is a low probability event and hopefully better sense prevails in the first week of July and that is what we are hoping for. We are bracing up for some sort of volatility in and around that date to see this through.
Time of India
10-06-2025
- Business
- Time of India
Rs 13 lakh crore boom, but Q4 sends a wake-up call to smallcap investors
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Even as retail investors pour into smallcap stocks chasing a stunning Rs 13 lakh crore boom over the last two months, the Q4 earnings season saw smallcap segment companies suffering the to JM Financial, smallcaps recorded the highest proportion of earnings misses in Q4FY25—31% of companies underperformed expectations, compared to 28% in midcaps and just 17% in largecaps. Out of 143 smallcaps tracked, 45 missed estimates while only 32 met message from Motilal Oswal Financial Services (MOFSL) was even more blunt: 'The smallcap segment has been a laggard, recording not only weaker-than-expected numbers but also a notable aggregate PAT decline of 16% YoY.'Sales were up 5%, but EBITDA dropped 6% and PBT plummeted 22%. The pain points? Smallcap financials and retail took a heavy the NBFC-lending segment, earnings collapsed by a massive 68% YoY, driven by weak revenue and poor asset quality—especially among microfinance institutions. This one segment alone accounted for over 92% of the total PAT decline in the smallcap smallcap private banks and insurers weren't spared. Private banks posted a 21% drop in profits, while insurers like Star Health reported operating losses and a token PAT—down 100% names in the smallcap space saw a 34% fall in profits, dragged by soft demand and restaurant chains slipping into losses—unlike their mid and largecap counterparts that delivered (-23% PAT), Oil & Gas (-51%), and even Tech (-1%) added to the misery. Consumer names posted just 7% PAT growth, while Cement was flat at 3%, Motilal yet, there were pockets of strength. Capital Goods stood out with 49% YoY PAT growth, beating both mid and large peers. Chemicals rebounded with 36% profit growth. Other stars included Consumer Durables (+64%), EMS (+52%), Staffing (+61%), and Real Estate (+37%).Still, the broader picture remains one of caution.'Mid and smallcap stocks where growth is faltering but valuations are still high are in the penalty box,' said Trideep Bhattacharya, CIO – Equities, Edelweiss Mutual Fund. 'At the end of the day, we are bottom-up stock pickers and we are fine with largecap valuations. Within mid and smallcaps, we advise selectivity as a strategy in the sense that wherever there is a valuation premium, we make sure that there is an earnings growth premium that comes along with it.'Bhattacharya added that small and midcaps are currently trading 17–25% above their 10-year average valuations—unjustified unless backed by Appala, Fund Manager at Capitalmind PMS, echoed this view: 'Largecaps currently offer a better balance of earnings visibility and valuation comfort. The current environment rewards discipline and fundamentals over broad-based exposure—especially when smallcap multiples leave little room for error.'The takeaway: Smallcaps may be in vogue, but the Q4 scorecard shows that the rally isn't built on solid ground—at least not yet.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Time of India
08-06-2025
- Business
- Time of India
Markets may move in 5% range till festive season: Trideep Bhattacharya
Indian equities are likely to consolidate in a narrow 5% range over the next few months as the market undergoes a phase of time correction, says Trideep Bhattacharya , CIO – Equities at Edelweiss Mutual Fund . While macro uncertainties have eased and policy momentum has picked up, the missing link remains corporate earnings, which he expects to revive meaningfully only in the second half of FY26. Until then, Bhattacharya believes the market will hold steady, supported by improved consumption drivers and investor sentiment, but without major upside. Edited excerpts from a chat: How do you see the markets going ahead following the Q4 earnings season? The markets are now close to September 2024 levels. Our earnings growth is likely to be back by the second half of FY26. And then there will be the festive season effect as well. For the next 3–4 months, earnings growth will take time to come back. With macro uncertainties out of the way, we expect time correction in markets from here till the festive season. When we say time correction, it'll be in the range of 5%. We've been saying since the beginning of this year that the markets have been climbing the wall of worry. In January, we didn't know where India would spend, and we didn't know what Trump would do in terms of policies. And 2024 was dominated by national elections, so earnings took a backseat. The only thing that is still missing is earnings. Policy paralysis, which was there in 2024, has now been resolved. And in the first quarter of the calendar year, economic decision-making has started. You can see that in the form of order announcements. For this to translate into earnings, it'll take a few quarters more—which is where the second half of FY26 hypothesis lies. So basically, the market has moved from an extremely macro-uncertain environment to one with a reasonable macro. But we are standing without the support of earnings. Till then, we might see a bit of time correction. So you don't see the possibility of a major decline? Not more than a 5% range. While the macro has been particularly torturous over the last 2–3 months, three or four positives have happened, which can't be ignored. Oil prices have corrected 25%, which is a big boost to consumption. Second, inflation has come off by close to 100 basis points, which will also boost the consumer's pocket. Third, rate cuts have happened, and liquidity has been eased. And finally, in the Budget, the Finance Minister effectively gave a salary hike for urban consumers to the tune of 5–7%. All of these make a reasonably strong case for consumption to start picking up in the second half of this year. We have a strong case for earnings coming back. The only risk to this overall scenario is if Trump overdoes it. Then we will probably see a global recession starting with the United States, which will have global implications. How comfortable are you with the valuations now? Largecaps would be basically in line with, or at a 5% premium to, the 10-year average. Mid and smallcaps would be anywhere between a 17% to 25% premium to 10-year averages. At the end of the day, we are bottom-up stock pickers and we are fine with largecap valuations. Within mid and smallcap, we advise selectivity as a strategy—in the sense that wherever there is a valuation premium, we make sure that there is an earnings growth premium that comes along with it. Mid and smallcap stocks where growth is faltering but valuations are still high are in the penalty box. Those are the ones to avoid. And fortunately, we've been able to do so, which is why, if you look at the PEG ratios of our portfolios, it seems to suggest that we've kept a balance between valuations and growth at a steady level. Which sectors are you particularly interested in at this stage? At the beginning of the year, we called consumption the dark horse of 2025. We actually also launched a consumption fund in the first quarter of the year. The second one is financials. Within them, we are bullish on NBFCs in particular, which are one of the rate cut beneficiaries and whose valuations are still reasonable. Earnings growth is likely to remain strong as we get into FY26. The third area where we have been overweight is defence. The recent conflict between India and Pakistan opens up the opportunity for exports. That is something that will play out in the medium term. In the near term, valuations capture a whole bunch of positives. And finally, with regard to IT services, this is an area where we have been underweight. But we are gradually going neutral because we think expectations are extremely reasonable right now. Valuations are around long-term averages. If you look at it, things can get better from here. This is, of course, barring a scenario where we have a global recession. The market doesn't seem to be very bullish on staples, as the numbers haven't been very good, but discretionary is relatively better. Would you agree? This is the reason why we called out consumption to be the dark horse of 2025. We were positive on consumer discretionary, but not on staples. The reason staples have not done well is because they cater to mass consumption, which was hit by high inflation and interest rates. Now inflation has started to come off, and we are seeing more rate cuts happening. This will act as a boost. A slightly better-than-expected monsoon will be positive for mass consumption. Staples will gradually make a comeback. In the last 2–3 years, consumption has not done extremely well. We have been saying that premiumization is a big theme, but that doesn't seem to have played out as much. Why is that? That hasn't played out because real income growth has been lower in that segment over the last couple of years. Urban income growth has been struggling for various reasons—jobs, inflation, etc. Our real income growth has been weak, and that's why the Budget gave tax benefits. This would mean that effectively, the net take-home salary will increase somewhere between 5–7%, which is the annual salary hike for an urban consumer. So it effectively gives them an additional salary hike, which will hopefully boost earnings of consumption companies as we go towards the second half of this year. Some mutual funds have been sitting on huge amounts of cash. But as a fund house, Edelweiss doesn't make cash calls. In that case, how do you deal with the problem of valuation? The cash in our portfolios is usually less than 5%. But even within that, we've historically held lesser cash as we were not particularly negative on the market since the beginning of the year. The overall way we manage valuation risk is by shifting our allocations across different market cap ranges. Between large, mid, and small, whichever segment offers us more valuation comfort—adjusted for growth—we are gradually moving towards that. My two bits on cash calls is that we don't want to mix asset allocation with stock selection. Your job is stock selection, not asset allocation. Asset allocation is about how much money I should put into equities versus how much cash I should hold. That is typically best done by a distributor who knows the client's cashflow profile.
Economic Times
08-06-2025
- Business
- Economic Times
Markets may move in 5% range till festive season: Trideep Bhattacharya
How do you see the markets going ahead following the Q4 earnings season? Live Events So you don't see the possibility of a major decline? How comfortable are you with the valuations now? Which sectors are you particularly interested in at this stage? The market doesn't seem to be very bullish on staples, as the numbers haven't been very good, but discretionary is relatively better. Would you agree? We have been saying that premiumization is a big theme, but that doesn't seem to have played out as much. Why is that? Some mutual funds have been sitting on huge amounts of cash. But as a fund house, Edelweiss doesn't make cash calls. In that case, how do you deal with the problem of valuation? (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Indian equities are likely to consolidate in a narrow 5% range over the next few months as the market undergoes a phase of time correction, says Trideep Bhattacharya , CIO – Equities at Edelweiss Mutual Fund While macro uncertainties have eased and policy momentum has picked up, the missing link remains corporate earnings, which he expects to revive meaningfully only in the second half of FY26. Until then, Bhattacharya believes the market will hold steady, supported by improved consumption drivers and investor sentiment, but without major excerpts from a chat:The markets are now close to September 2024 levels. Our earnings growth is likely to be back by the second half of FY26. And then there will be the festive season effect as well. For the next 3–4 months, earnings growth will take time to come macro uncertainties out of the way, we expect time correction in markets from here till the festive season. When we say time correction, it'll be in the range of 5%.We've been saying since the beginning of this year that the markets have been climbing the wall of worry. In January, we didn't know where India would spend, and we didn't know what Trump would do in terms of policies. And 2024 was dominated by national elections, so earnings took a backseat. The only thing that is still missing is paralysis, which was there in 2024, has now been resolved. And in the first quarter of the calendar year, economic decision-making has started. You can see that in the form of order this to translate into earnings, it'll take a few quarters more—which is where the second half of FY26 hypothesis lies. So basically, the market has moved from an extremely macro-uncertain environment to one with a reasonable macro. But we are standing without the support of earnings. Till then, we might see a bit of time more than a 5% range. While the macro has been particularly torturous over the last 2–3 months, three or four positives have happened, which can't be ignored. Oil prices have corrected 25%, which is a big boost to consumption. Second, inflation has come off by close to 100 basis points, which will also boost the consumer's rate cuts have happened, and liquidity has been eased. And finally, in the Budget, the Finance Minister effectively gave a salary hike for urban consumers to the tune of 5–7%.All of these make a reasonably strong case for consumption to start picking up in the second half of this year. We have a strong case for earnings coming only risk to this overall scenario is if Trump overdoes it. Then we will probably see a global recession starting with the United States, which will have global would be basically in line with, or at a 5% premium to, the 10-year average. Mid and smallcaps would be anywhere between a 17% to 25% premium to 10-year the end of the day, we are bottom-up stock pickers and we are fine with largecap valuations. Within mid and smallcap, we advise selectivity as a strategy—in the sense that wherever there is a valuation premium, we make sure that there is an earnings growth premium that comes along with and smallcap stocks where growth is faltering but valuations are still high are in the penalty box. Those are the ones to avoid. And fortunately, we've been able to do so, which is why, if you look at the PEG ratios of our portfolios, it seems to suggest that we've kept a balance between valuations and growth at a steady the beginning of the year, we called consumption the dark horse of 2025. We actually also launched a consumption fund in the first quarter of the second one is financials. Within them, we are bullish on NBFCs in particular, which are one of the rate cut beneficiaries and whose valuations are still reasonable. Earnings growth is likely to remain strong as we get into third area where we have been overweight is defence. The recent conflict between India and Pakistan opens up the opportunity for exports. That is something that will play out in the medium term. In the near term, valuations capture a whole bunch of finally, with regard to IT services, this is an area where we have been underweight. But we are gradually going neutral because we think expectations are extremely reasonable right now. Valuations are around long-term you look at it, things can get better from here. This is, of course, barring a scenario where we have a global is the reason why we called out consumption to be the dark horse of 2025. We were positive on consumer discretionary, but not on staples. The reason staples have not done well is because they cater to mass consumption, which was hit by high inflation and interest inflation has started to come off, and we are seeing more rate cuts happening. This will act as a boost. A slightly better-than-expected monsoon will be positive for mass will gradually make a comeback. In the last 2–3 years, consumption has not done extremely hasn't played out because real income growth has been lower in that segment over the last couple of income growth has been struggling for various reasons—jobs, inflation, etc. Our real income growth has been weak, and that's why the Budget gave tax benefits. This would mean that effectively, the net take-home salary will increase somewhere between 5–7%, which is the annual salary hike for an urban it effectively gives them an additional salary hike, which will hopefully boost earnings of consumption companies as we go towards the second half of this cash in our portfolios is usually less than 5%. But even within that, we've historically held lesser cash as we were not particularly negative on the market since the beginning of the overall way we manage valuation risk is by shifting our allocations across different market cap ranges. Between large, mid, and small, whichever segment offers us more valuation comfort—adjusted for growth—we are gradually moving towards two bits on cash calls is that we don't want to mix asset allocation with stock selection. Your job is stock selection, not asset allocation. Asset allocation is about how much money I should put into equities versus how much cash I should hold. That is typically best done by a distributor who knows the client's cashflow profile.
