Corporate earnings in India have shown resilience despite a challenging global environment, with a significant pickup in earnings growth during the June quarter, according to Vetri Subramaniam, MD & CEO, UTI AMC.
In an interview with NDTV Profit, Subramaniam said corporate results across the board have held up reasonably well in the June quarter despite geopolitical uncertainties. However, Indian earnings have been somewhat disappointing when compared with global markets.
Globally, he believes the artificial intelligence-led capital expenditure cycle remains a key growth driver. “The AI boom is holding global growth together,” Subramaniam said, adding that AI-related capex is largely being driven by US-based organisations.
On Indian equities, Subramaniam said large-cap stocks are reasonably positioned from a valuation perspective, while underlying fundamentals and macroeconomic conditions remain strong.
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He expects the Reserve Bank of India (RBI) to remain watchful of emerging inflationary pressures and said the central bank may have to consider rate hikes if inflationary fears rise. Nevertheless, he believes the broader economy remains in good shape.
Subramaniam also pointed to FCNR-B flows as a factor that could help keep the Indian yield curve healthy, while adding that the currency could spring surprises in the future.
Interestingly, he said the greatest comfort in the current market environment lies in the small-cap segment, suggesting that valuations and growth prospects in parts of the space remain attractive.
Within sectors, financials remain a preferred area, supported by strong credit growth. Overall, Subramaniam's outlook suggests that while geopolitical risks remain a concern, resilient domestic fundamentals, healthy credit growth and the global AI capex cycle could continue to provide support to markets.
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