Ashwini Agarwal On India Inc: India Inc's earnings outlook remains relatively constructive despite heightened geopolitical uncertainty, with Corporate India capable of delivering 12-13% earnings growth, according to Ashwini Agarwal, Founder of Demeter Advisors LLP.
Agarwal said large-cap stocks are attractive from a valuation perspective, while cautioning investors against trying to identify the exact bottom of the market. He said traders are likely to adopt a bottom-up strategy in a weak market, adding that bottom-up investing has been rewarding in India.
The comments come against the backdrop of a stronger underlying corporate earnings performance in Q1FY27. An analysis by Bank of Baroda economist Aditi Gupta showed that, for a sample of 2,623 companies, sales growth accelerated to 17.5% year-on-year (YoY) in the June quarter from 5% in the year-ago period. Profit growth also accelerated to 23.7% from 7.3%, after excluding the BFSI and crude oil sectors.
The improvement came despite elevated commodity and currency volatility and higher operating costs during the quarter. Companies managed cost pressures through calibrated price increases, supply-chain changes, inventory management and cost optimisation.
The Q1 performance indicated that underlying growth momentum remained intact, with consumption and manufacturing continuing to support corporate earnings.
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Large-Caps Attractive From Valuation Perspective
Against this earnings backdrop, Agarwal said large-cap stocks look attractive from a valuation perspective.
His view comes as investors contend with heightened geopolitical uncertainty and volatility across global markets.
Rather than attempting to predict when the broader market will bottom, the focus could shift towards individual companies and their earnings prospects.
Trying To Catch Market Bottom Is Futile
Agarwal cautioned investors against trying to time the market bottom.
“Trying to catch bottom levels is done in futility,” he said.
He expects traders to opt for a bottom-up strategy in a weak market, while noting that bottom-up investing has been rewarding in India.
The approach puts greater focus on individual companies and their fundamentals rather than attempting to make a broad market call or identify the precise level at which the market will turn.
US-Iran War Makes Market Outlook Unpredictable
Geopolitical uncertainty remains a key concern for Indian equities, with Agarwal describing the US-Iran war situation as completely unpredictable.
He said he does not know when US-Iran hostilities will cease, making it difficult for investors to assess how long the geopolitical overhang could persist.
The war is also causing disinterest among foreign institutional investors (FIIs) in Indian markets, according to Agarwal, adding another layer of uncertainty for domestic equities.
Rupee Looks Relatively Stable
Amid the geopolitical uncertainty, Agarwal said the rupee looks relatively stable now.
However, he described the current environment as “scary” for markets, reflecting the uncertainty surrounding the US-Iran conflict and its impact on investor sentiment.
For investors, Agarwal's message is therefore not centred on trying to call the precise market bottom.
Instead, with Corporate India capable of delivering double-digit earnings growth and large-caps looking attractive on valuations, a bottom-up approach focused on individual companies could prove more useful as markets navigate the uncertainty.
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