In an interview with Kshitij Anand of ETMarkets, Desai mentioned: “Buyers ought to keep watchful of developments, however I don’t see this impacting India’s long run structural progress story,” Edited excerpts:
Q) After a bearish February we entered a bullish March. How is the market on the lookout for the first month of the brand new monetary yr?
A) After dealing with turbulence in February, the market sentiment notably improved in March with important restoration in main indices. Heading into April 2025—the beginning of FY26—I see cautious optimism going forward.
Valuations have corrected to cheap ranges, and macro fundamentals, like GDP progress forecasts of round 6–6.5%, look encouraging.
Moreover, the latest turnaround in FII sentiment—with March witnessing web constructive flows—is a plus for investor confidence. Nevertheless, buyers ought to nonetheless stay cautious, as exterior dangers, particularly across the latest US tariff bulletins, might trigger some short-term volatility.
Q) Trump’s tariff is one thing which has saved merchants on the sting. What’s your tackle the latest bulletins and the way it will affect India Inc.?
A) Trump’s renewed tariff push definitely provides uncertainty and will affect Indian exporters in sectors similar to textiles, auto & auto elements, prescription drugs and specialty chemical compounds.Nevertheless, these tariffs are primarily negotiating instruments and we might see some adjustments within the tariff charges going ahead. Brief-term results might embody margin strain, supply-chain disruptions.Nevertheless, India’s financial system stays predominantly domestically pushed, cushioning the broader market from extended adversarial results.
Buyers ought to keep watchful of developments, however I don’t see this impacting India’s long run structural progress story.
Q) FIIs flows appears to be displaying indicators of turnaround – how do you see the pattern in FY26?
A) The latest reversal in FII flows is encouraging. After heavy promoting in FY25, we noticed FIIs turning web consumers in March 2025.
The primary causes for renewed curiosity may very well be improved valuations following final yr’s correction, wholesome home macroeconomic fundamentals, and expectations of moderating inflation resulting in potential RBI price cuts.
Going ahead in FY26, if international uncertainties just like the US rate of interest setting and commerce tensions ease or stabilize, we might see extra sustained and significant FII inflows returning.
Whereas short-term volatility in flows may persist, I consider the structural attractiveness of India’s financial system and progress prospects will entice international buyers.
Q) Any key developments or components which one ought to be careful for in FY26?
A) A number of vital macro components benefit shut consideration in FY26. First is the evolving international commerce state of affairs, notably US tariff insurance policies and any retaliatory measures.
These can considerably affect international danger sentiment and market volatility. Domestically, India’s financial progress trajectory, projected round 6–6.5%, shall be essential—particularly authorities capex and general demand restoration because of the tax exemptions to some extent.
Inflation and RBI’s financial coverage stance are different crucial components, as decrease inflation (~4.2% projected for FY26) might result in additional price cuts, boosting sentiment and liquidity.
Lastly, foreign money stability, commodity worth traits, and international macro developments, similar to US recession dangers or geopolitical tensions, will form market actions considerably this yr.
Q) What must be the best asset allocation for somebody who’s within the age bracket of 30-40 years? If somebody plans to deploy Rs 10 lakh?
A) For the required age bracket, I consider the best portfolio allocation must be roughly 70% in equities, 20% in fastened earnings devices or fastened deposits, and the remaining 10% allotted to different investments.
Q) If somebody is sitting on a web portfolio loss in 2025 – ought to they rejig the portfolio now? What are the important thing situations which ought to get glad first earlier than they rejig?
A) One ought to positively rejig the portfolio. It is an opportune second to shift investments in the direction of corporations that supply better readability concerning future earnings upgrades, strong money movement era, and people who have efficiently raised capital.
Given the latest correction in inventory costs, valuations in lots of shares have turn out to be engaging. Corporations offering sturdy progress visibility coupled with snug valuations ought to now be carefully monitored for potential inclusion in a single’s portfolio.
Q) What are the queries that you’re getting out of your purchasers?
A) Shoppers are displaying elevated curiosity in mid- and small-cap funding alternatives, particularly in corporations exhibiting higher ROE and ROCE profiles together with strong money movement era.
At present, the main target is totally on mid- and small-cap concepts characterised by sturdy financials, notably these corporations demonstrating wholesome money flows.
Q) How ought to one play the small & midcap theme in FY26?
A) As I’ve talked about earlier, components similar to wholesome ROE and ROCE profiles, strong money movement era, and clear visibility of earnings upgrades stay key standards for choosing shares within the small and mid-cap segments.
Furthermore, following the latest market correction, valuations on this area have turn out to be fairly engaging, making it an opportune time to put money into high quality small and mid-cap corporations.
(Disclaimer: Suggestions, strategies, views, and opinions given by consultants are their very own. These don’t signify the views of the Financial Instances)
