Indian markets are currently in a 'very good spot' with constructive investor sentiment, according to Dinshaw Irani, CEO of Helios Mutual Fund. Speaking to ET Now, Irani expressed optimism about the market outlook, stating that 'things are looking pretty bright' despite some challenges. The only major overhang identified is elevated crude oil prices triggered by geopolitical tensions in the GCC region, which has impacted India's macro stability. As Irani noted, 'I never wear this shirt very lightly with a bull on my chest as such. We are in for a good run in the markets.'
India's sensitivity to oil prices remains high due to large import dependence of 5 million barrels per day, as highlighted by Irani. The current elevated crude prices are impacting India's current account deficit and have led to FPI and FDI becoming almost zero. However, Irani noted that a resolution in global tensions could ease crude prices, which would significantly support India's macro stability. He emphasized that corporate earnings have remained resilient despite these macro pressures, with earnings growth coming in stronger than anticipated across segments. Recent developments show that markets may have already discounted short-term pain, with Irani noting that Q4 earnings have already surprised positively.
Contrary to earlier cautious expectations, earnings growth has come in stronger than anticipated, especially in broader markets. According to Irani, midcaps have shown earnings growth in the mid-20s, while the smallcap universe is in the early 20s. He noted that even after adjusting for companies moving from losses to profits, earnings trends remain healthy across the market. The quarterly numbers have been 'very exciting' with strong performance across these segments. Irani highlighted that the current quarter will be a trying one given that crude impact will be felt most in this quarter, but beyond that, earnings growth will come back to normal.
While the June quarter may reflect margin pressure due to crude and input costs, Irani expects recovery ahead with growth coming back to normal. He explained that the current quarter will be a trying one given that crude impact will be felt most in this quarter, but beyond that, earnings growth will come back to normal. Markets often discount such phases in advance, which may explain recent volatility, with Irani noting that Q4 earnings have already surprised positively. He cited autos and oil & gas as sectors where price transmission has already begun, with companies passing raw material hikes to end consumers, which could lead to further earnings surprises on the upside.
On portfolio strategy, Irani emphasized selective buying after sharp corrections where corrections have been excessive and not fundamentally justified. The focus is on new-age companies, discretionary consumption, and engineering/manufacturing-linked (EMS) space. He confirmed a strategic tilt away from largecaps toward mid and smallcap exposure, stating that 'growth rates from here on will be very exciting in this category' rather than in largecap space. IT remains a total avoid due to artificial intelligence-led disruption concerns that could pressure margins and growth in the sector. Irani warned that IT sector faces artificial intelligence-led disruption that could pressure margins and growth going forward.
