According to reports from ET Now, Vikas Khemani from Carnelian Asset Management & Advisors remains constructive on Indian equities, citing stronger-than-expected Q1 earnings that have been much better than expected, especially considering that the conflict in West Asia was at its peak during the quarter. He noted that there was a broad expectation that Q1 results would be weak, and market expectations had already been toned down. However, the numbers have largely been very encouraging, reflecting the underlying resilience of the economy and the strength of key growth drivers. Recent market performance shows Sensex closing 43 points higher at 78,499.17 and Nifty ending flat at 24,570.65, demonstrating the market's continued resilience despite geopolitical uncertainties.
As reported by ET Now, Khemani expresses continued conviction in the pharma/CDMO space, citing strong drivers and credit growth. He emphasized that on a structural basis, they remain very positive on the CDMO, pharma and healthcare sectors, with the key growth drivers for these industries continuing to be very strong. The latest data from Nomura confirms this optimism, with India's pharmaceutical market growing 12.1% year-on-year in July 2026, driven by price increases of 6%, new product launches of 3.7% and volume growth of 2.3%. Nomura notes that IPM growth has "picked up in CY26" after a lull in CY24 and CY25 and has been "trending in double-digits in CY26", with anti-diabetes and VMNs leading therapy growth.
According to ET Now, Khemani remains bullish on the manufacturing sector, noting that India's manufacturing sector currently accounts for around 15-16% of GDP, but over the next decade, this share is expected to rise to 20-25%. He highlighted that such a significant shift in GDP composition is relatively rare and creates substantial opportunities. He pointed to two important developments over the past year and a half: India has moved ahead with free trade agreements, gaining access to additional markets worth approximately $1.5 trillion, and the Indian currency has depreciated by around 13-15% against many of its trading partners following the West Asia conflict.
As reported by ET Now, Khemani maintains that IT services companies are essential for implementing AI tools and are poised for continued returns. He noted that when the AI investment narrative was at its peak, they had already reduced their exposure before it became widely popular, resulting in being significantly underweight at the height of the AI trade. He emphasized that IT services firms will continue to play a crucial role in implementing, integrating and managing AI technologies for businesses, with the sector remaining relatively under-owned and out of favour with many investors.
According to ET Now, Khemani expresses continued conviction in the banking sector, citing several positive surprises this earnings season including stronger-than-expected systemic credit growth. He noted that there have been positive surprises ranging from systemic credit growth in the banking sector to encouraging results from manufacturing companies. For tactical opportunities, he points to PSU banks and chemicals as sectors that look particularly interesting from a risk-reward perspective, emphasizing that stock selection remains critical and investors should focus on company-specific fundamentals rather than taking a broad sectoral approach.
