Market poised for next uptrend as growth revives, says Ashi Anand

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Indian equity markets have been in a consolidation phase for nearly 18 months, influenced by weak growth, high interest rates, and geopolitical uncertainties, according to Ashi Anand, Founder & CEO of IME Capital. However, he notes that the outlook is improving, with growth indicators showing significant strength over the past few months. Recent quarterly earnings reflected a 14-15% increase, and sector commentary has turned more optimistic. Various demand-boosting measures, such as GST cuts and lower interest rates, are beginning to impact the economy positively.

Anand believes the market may be nearing its next upward phase, especially with global and US Federal Reserve rate expectations becoming more favorable and signs of domestic consumption reviving. Nevertheless, he points out two lingering risks: the unresolved US-India trade deal and pressure on the rupee, both of which could significantly influence investor sentiment. Anand’s investment strategy focuses on domestic themes, particularly in the digital ecosystem and banking sector, where he sees potential for strong earnings growth.

He expresses caution regarding global cyclicals due to trade and currency uncertainties and is selective in the pharmaceutical sector due to challenges from declining profits linked to specific drugs. The IT sector also remains under scrutiny amid economic uncertainties and potential disruptions from AI. While he acknowledges the strong fundamentals of classic moat-driven companies like Asian Paints and IndiGo, he warns that inflated valuations from previous years may keep these stocks under pressure as earnings normalize.

Anand’s fund has a high concentration in a few stocks, which he attributes to strict criteria focused on competitive advantages and long-term viability. He anticipates that upcoming digital IPOs could provide opportunities for diversification without sacrificing quality.