Nifty, Sensex To Hibernate Until Earnings Improve, Says Market Veteran
The markets may enter a period of relative quiet over the next six months, as major indexes go into "hibernation," according to Jinesh Gopani, Chief Investment Officer at Taksh Asset Management Company. He also said that an earnings rebound could follow in subsequent quarters, driven by a recovery in government spending and select sector-specific opportunities.
Our feeling is indexes might go into sort of a hibernation for the next six months, wait for the next leg of improvement in terms of GDP, but stock-specific activity is going to be pretty strong.Jinesh Gopani
Gopani believes a pickup in government spending could provide significant investment opportunities in select sectors despite the broader market slowdown.
Government Capex
Discussing the role of government spending, Gopani said, "We have to see in the next two quarters how the government starts doing the pump-priming of the economy again, and I anticipate that from January onwards, you should see the government starting to spend."
He noted that recent GDP data reflected a decline in government expenditure, alongside faltering private consumption.
"The government had to do significant pump priming post-Covid, but the heavy lifting seems to have tapered off," he said, adding that a return to normal growth in the capital expenditure program is expected from January onwards.
Private consumption has also faltered, further weighing on growth prospects. "Both key pillars—government spending and private consumption—are essential for us to revive growth," Gopani noted.
Sector-Specific Opportunities
Despite the subdued outlook for the broader market, Gopani remains optimistic about stock-specific activity, citing strong earnings growth within Taksh AMC's portfolio. "Even in the last quarter, despite weak overall market conditions, our portfolio showed earnings growth of 19 to 20%," he said.
Gopani pointed to disruptive technologies, specialty chemicals, auto ancillaries, niche financials, and healthcare as key sectors poised for growth. "Many opportunities lie in the right sectors, whether it's artificial intelligence, cyber security, or contract development and manufacturing organisations in healthcare," he said, noting the long-term potential of these industries.
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