On this version of ETMarkets Good Discuss, Ajay Garg, Director and CEO of SMC World Securities, attributes this surge to rising monetary literacy, elevated participation from Gen Z traders, and a shift away from conventional funding choices like fastened deposits.
He additionally highlights how elements similar to tax aid, improved disposable revenue, and simpler digital entry are reinforcing the pattern of disciplined, long-term investing throughout India’s smaller cities. Edited Excerpts –
Q) Thanks for taking the outing. Markets are struggling within the first month of 2H2025. What’s limiting the upside?
A) In July, the market has been struggling a bit because of the ongoing tariff jitters, FII cautious stance, the Jane Road fiasco, and world macro headwinds like geopolitical tensions. Nonetheless, Nifty holding agency across the 25,000 mark alerts underlying resilience.
There may be optimism round a possible discount in U.S. tariffs on Indian items, presumably beneath 20%, which might improve India’s export competitiveness and help foreign exchange inflows.
Additionally, the lively participation from home institutional traders and retail traders, together with a vibrant IPO market, mirrored robust confidence in India’s progress trajectory over the long run.
Q) The June quarter season has simply begun – how do you see India Inc. faring on this quarter? Which sectors ought to traders be careful for?
A) India Inc. is anticipated to report modest earnings progress within the June quarter, supported by regular home consumption and easing enter prices.Working margins may even see enchancment as inflationary pressures soften and liquidity situations enhance, though the broader advantages might materialize extra clearly within the second half of FY26.Key sectors to look at embrace oil advertising corporations, which may gain advantage from stronger refining and advertising margins.
Capital items sectors also can lead the rally within the June quarter earnings, led by the rising order ebook within the energy and infrastructure segments.
The cement sector can witness good progress, led by larger cement costs and higher gross sales quantity progress. Increased footfalls and mattress additions can enhance healthcare sector earnings.
Due to this fact, June quarter outcomes can supply early insights into a possible turnaround in company efficiency.
Q) Everybody says it’s a inventory pickers market now and the day of constructing straightforward cash is over. What are your views?
A) The market has at all times rewarded disciplined inventory pickers who concentrate on robust fundamentals and technicals. Whereas the chance to make fast positive factors exists, it requires well-timed entry and exit choices which might be free from emotional bias.
Within the present atmosphere of volatility and geopolitical uncertainties, a well-diversified portfolio throughout equities, bonds, and gold is important.
A well-diversified portfolio, mixed with disciplined inventory selecting, continued SIP investing, and restricted publicity to speculative trades, is probably the most resilient method in immediately’s market.
Q) SIP crossed Rs 27000 cr for the primary time in June. What’s boosting the momentum?
A) SIP crossing the ₹27,000 crores mark for the primary time in June is a transparent signal that traders are shifting in the direction of a disciplined method amidst rising volatility.
This has highlighted the advantages of rupee value averaging, serving to traders navigate fluctuating markets by spreading investments over time.
Moreover, India’s sturdy financial efficiency amidst geopolitical uncertainty could appear to strengthen the belief of traders in common investing.
The tax reliefs introduced within the Union Price range and repo price reduce have elevated the disposable revenue, which has led to larger funding.
The benefit of investing, rising monetary literacy in tier-2 and tier-3 cities, and Gen Z shifting away from traditional funding choices similar to FDs are additionally the important thing elements behind the surge in SIP funding.
Q) FIIs are nonetheless not again in India utterly – is it valuations or earnings that are proving to be headwinds?
A) FIIs not utterly returning to the Indian market is a mixture of a number of elements, similar to stretched asset valuations, muted company earnings in the previous few quarters, and evolving world commerce insurance policies.
As soon as company earnings present clear and sustained progress that justifies present valuations, FIIs are prone to return to Indian markets with larger confidence. Regardless of this, India’s progress story stays intact.
Because the world’s fastest-growing main economic system, its resilience amid world uncertainty continues to bolster its long-term funding attraction.
Q) Which sectors are prone to drive momentum within the 2H2025?
A) Sectors which might be prone to drive momentum within the second half of 2025 are healthcare, manufacturing, capital items, and financials. The rising focus in the direction of healthtech, R&D spends, and better capex by hospital chains can drive the success of this sector shifting forward.
Within the manufacturing sector, help insurance policies for MSMEs, export-oriented progress, Trade 4.0, and a concentrate on self-dependency will even nurture the expansion of this sector.
Authorities infrastructure spending would drive the order ebook of the capital items sector. Current price reduce and discount in CRR to spice up borrowings by each corporates and retail.
The retail inflation easing to a six-year low of two.1% in June is a constructive sign. Together with this, the steps to spice up disposable revenue, larger rural demand attributable to a good monsoon, and the upcoming festive season might additionally profit the FMCG and car sectors.
Moreover, the inflation drop also can pave the way in which for the RBI to think about one other price reduce within the August assembly, thereby benefiting the banks and monetary sectors with a wholesome mortgage ebook and higher liquidity.
Q) Any sector(s) which you assume is overheated?
A) The defence sector is probably the most talked-about being overheated or buying and selling at excessive valuations. This 12 months’s rally is influenced by the geopolitical conflict conditions in India and on the world degree.
Nonetheless, these rising valuations is also justified by its higher earnings prospects with a rising order ebook and India’s steps to create self-sufficiency. The “Make in India” has reaped the advantages with the large enlargement in defence manufacturing within the nation and exports hitting an all-time excessive of over ₹23,622 crores in FY25.
The indigenization efforts, record-level contracts, and devoted Defence Industrial Corridors are additionally clear indicators of a booming defence sector.
So, this overheating zone will be attributed to the general rising potential of the defence sector and never simply the conflict fancy rally.
Q) Regardless of latest regulatory steps, retail traders nonetheless account for 91% of the losses within the derivatives phase. What extra can SEBI do to guard them?
A) It’s shocking that 91% of the retail traders are nonetheless making losses within the EDS (Fairness Derivatives Section) in FY25.
Beginning November 2024, SEBI has carried out phased measures to strengthen the derivatives market, similar to just one weekly index choices per trade, larger contract sizes, upfront assortment of premium from choices consumers, and so on.
Although the losses have widened, the SEBI research has additionally revealed that the person merchants are taking a cautious stance. The typical each day commerce worth within the EDS phase by particular person merchants has dropped by 11% YoY in December 2024 – Could 2025.
The Jane Road saga has additionally been the largest eye-opener for the regulator to supervise proprietary buying and selling companies’ exercise within the F&O area.
Transferring forward, the total affect of the SEBI’s steps to handle danger, mixed with the prudent checks on intraday actions within the F&O market, can absolutely create a extra useful and speculative-free atmosphere for retail merchants.
(Disclaimer: Suggestions, solutions, views, and opinions given by consultants are their very own. These don’t symbolize the views of the Financial Occasions)
