In an interview with Kshitij Anand of ETMarkets, Jain said: “We believe the India growth story remains strong. While there will be periods of corrections, the Indian markets are poised for growth in the next 5-10 years,” Edited excerpts:
Thanks for taking the time out. February was a weak month for the Indian market, but March looks stable. How are you viewing the markets?
After five consecutive months of decline, the market witnessed a recovery in March, driven by multiple factors.
The delay in tariffs improved global sentiment, while domestically, mid- and small-cap stocks, which were severely impacted during the sell-off, rebounded due to attractive valuations.
Additionally, the trend of FIIs outflows slowed, with FIIs becoming net buyers of Rs 2,000 crore in cash markets and covering their short positions. These factors have contributed to market stability.
India’s structural growth outlook remains positive. Around 80% of India’s GDP growth is driven by domestic investment, consumer spending, and government expenditure.
The demographics are in country’s favor and the several government reforms introduced in the last few years including make in India push and increased infrastructure spending has strengthened the country’s economic footing.
The recent muted consumer demand and reduced government spending is nothing but a temporary lull. Last year’s good monsoon will provide boost to the rural economy. The budget 2025 also focused on boosting consumption that will fare well for the economy.
Overall, we believe the India growth story remains strong. While there will be periods of corrections, the Indian markets are poised for growth in the next 5-10 years.
What is your view on the US Fed decision? Do you see US markets topping out as there are signs of a slowdown?
The US Federal Reserve is likely to keep interest rates unchanged as inflation remains a concern.
The recent surge in inflation, coupled with the impact of domestic tariffs, could push prices higher in the short term, reducing the chances of a rate cut anytime soon.
Higher inflationary pressures may force the Fed to maintain its restrictive stance for longer. Given this scenario, global markets are expected to remain in a wait-and-watch mode, closely monitoring how tariffs impact inflation and economic growth.
US markets may see limited upside, with signs of a slowdown adding to concerns about potential market topping.
We are also in the last month of the financial year. How do you see fund flows for Indian markets in the next financial year? Has the valuation overhang corrected?
In the past few months, we saw major outflows from India. India dedicated funds in February alone saw outflows of $1.6 billion. In contrast, other emerging markets like China and Taiwan performed better. But things will turn around from here.
Going forward, we believe fund flows in the Indian markets are likely to remain on a positive side. Short-term challenges may persist, but this financial year will see India coming back on radar!
We have seen double-digit gains in Gold & Silver. How should investors approach precious metals in the next financial year? Is it time to increase allocation or book some profits?
Gold and silver have given phenomenal returns to the investors. However, it’s unlikely we will see the same level of returns going forward.
Hence, we always recommend investors maintain a well-diversified portfolio across asset classes, including allocation to gold.
Having said that, after the recent rally, we might see minor profit booking specifically in gold.
Do you recommend retail investors diversify into global markets? What should be the ideal portfolio allocation?
A well-diversified portfolio is key to success in the world of investing. Retail investors should diversify into global markets to reduce risk and enhance returns.
Allocating 10-15% of the portfolio to international equities provides exposure to different economies and sectors, balancing domestic volatility.
For example, last year, Chinese markets surged 30% from their lows, highlighting global opportunities. Investing in US, European, or emerging market funds through ETFs or mutual funds can improve long-term portfolio stability and growth.
What are the big themes investors can track for the next financial year?
Banking, healthcare services, renewable energy, real estate and agriculture and rural sector are expected to do well.
The healthcare services sector in India is poised for significant growth due to increased government spending and initiatives like Ayushman Bharat.
The government support of MSP and government schemes will lead to boost the consumption in the agriculture sector. It is also expected that agriculture and rural sectors will be least impacted by the global slowdown.
Real estate sector has seen a steep correction in the last few months. However, the demand for housing will continue to grow, especially in the premium and luxury segments.
We have found some stability, but are there any other factors that could trigger another round of selling?
While the market has found stability, several factors could trigger another round of selling. Persistent inflation, delayed rate cuts by the US Fed, and further tariff impacts could create uncertainty.
Additionally, rising crude oil prices, geopolitical tensions, or weaker corporate earnings could weigh on sentiment. Any sharp FII outflows may also lead to renewed market volatility.
Looking at the December quarter results coupled with the tariff hikes seen in the past two months, what is your outlook for the March quarter for India Inc.?
India Inc.’s March quarter is expected to reflect a mixed performance. While the impact of past tariff hikes may exert cost pressures, strong domestic demand and easing FII outflows could provide support.
Sectors like banking and IT may remain stable, while consumption-driven industries could face margin pressures. Overall, the quarter may see moderate growth with sectoral variations.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
