2 days ago
Pankaj Tibrewal, Founder and Chief Investment Officer of IKIGAI Asset Manager, expects earnings growth estimates for 2025-26 (FY26) to be revised downwards by 11-13% after the October-December 2024 (Q3FY25) results. He believes this adjustment could set the stage for a more stable market outlook.
Tibrewal noted that the era of easy money is over and projected market consolidation over the next 12-18 months.
He highlighted factors that bolstered markets last year, including stable commodity prices, which allowed corporate India to achieve record margins across sectors.
The RBI’s one-time dividend, robust tax collections from capital gains, $17-18 billion in foreign bond inflows, and strong domestic investments also helped offset weak equity inflows from foreign institutional investors (FIIs).
However, he pointed to three key challenges going forward. First, banking system liquidity has turned negative for the first time in five years, stretching working capital cycles. Tibrewal expects the Reserve Bank of India (RBI) to intervene through Open Market Operations (OMO) or forex swaps to normalise liquidity.
Second, government capital expenditure has slowed significantly, with current spending likely to fall 10-12% below budgeted levels. While recovery is expected post-monsoon, the delay has already impacted growth prospects.
Third, while broader indices have declined 12-14%, nearly 75% of stocks in the broader market are down more than 25% indicating a much deeper correction.
Tibrewal sees opportunities in sectors such as cement, where profitability is at multi-year lows, and metals, which could benefit from fiscal stimulus in the US and China.
He also highlighted speciality chemicals, which are poised for recovery after seven quarters of decline, driven by destocking, a low base, and improving agricultural demand.
For the entire interview, watch the accompanying video
