In an exclusive interaction with ETMarkets Smart Talk series, Gurpreet Sidana, CEO of Religare Broking Ltd., shares his insights on navigating market volatility, managing investor sentiment, and identifying long-term opportunities amid geopolitical tensions and shifting macro trends.
Emphasizing the importance of discipline and data-driven decision-making, Sidana cautions against chasing momentum and urges investors to focus on building resilient portfolios backed by fundamentals.
From defence and cement to fixed income and gold, he outlines the key sectors and strategies that can help investors create real, sustainable wealth in an unpredictable market environment. Edited Excerpts –
Q) Thanks for taking the time out. Let me get your perspective on the market. We have seen a lot of action on D-Street amid tariff and geopolitical situation between India & Pakistan. How do you manage to dodge the volatility?
A) It is always a pleasure interacting with you!
Volatility is an intrinsic part of the capital markets, and it is particularly evident during events like geopolitical flare-ups or tariff uncertainties. For a broking house, it’s never about predicting the next headline. It’s about staying prepared, always!
In periods of high tension, like the recent India-Pakistan developments, we rely on data-driven insights—especially stock beta analysis—to gauge market sensitivity and adjust exposure swiftly.
This helps to stay aligned with long-term goals while managing real-time risk. There is no one-size-fits-all formula for retail participants. Markets reward resilience, not impulse.
Never should you chase the momentum—but build on mechanisms. The real wealth is built on strategy, not speculation.
Q) How are you reading the micro and earnings picture for the next few quarters?
A) After a volatile start to 2025, Indian equities have staged a strong rebound, supported by easing geopolitical tensions, renewed FII inflows and more favourable trade developments.
Domestically, the macroeconomic environment is becoming increasingly supportive—retail inflation has declined to 3.16%, credit growth is projected to grow above 12%, and the RBI has initiated its rate-cut cycle, improving overall liquidity. The IMD’s forecast of an above-normal monsoon is also positive for lifting rural sentiment.
On the earnings front, the March quarter results have largely met expectations, showcasing broad-based sectoral strength. Looking ahead, we expect corporate earnings to remain resilient, with Nifty50 earnings likely to grow by 11–13% in FY26.
Despite global headwinds, India’s strong fundamentals and policy tailwinds continue to support its premium valuation narrative in global markets.
Q) Amid the volatility, what are the queries that you are receiving from your clients?
A) In this environment of heightened volatility, clients are primarily seeking clarity and direction on how to navigate the uncertain conditions. Capital protection is top of mind, with many asking whether it makes sense to partially move into debt or hybrid products.
There’s also strong interest in the sharp rally we have seen in sectors like defence and railways. Investors are keen to understand whether these moves are sustainable and where the next opportunities might lie.
We are also getting a lot of technical queries—around hedging strategies using options, insights from open interest build-up, and how FIIs are positioned in index and stock futures.
At the same time, many investors are seeking guidance on whether to stay the course with their SIPs and how to think about sector rotation in this evolving market landscape.
Q) Mutual funds increase cash allocation by Rs 17,300 crore to Rs 2.23 lakh crore in April. Are you also following a similar trend and using dips to enter markets?
A) Yes, we are observing this trend closely. The rise in mutual funds' cash allocations reflects a cautious yet opportunistic approach in the face of ongoing market volatility. Elevated cash levels suggest that fund managers are staying nimble, ready to deploy capital during market corrections.
From our side, we’re advising clients to remain selective and use market dips strategically—particularly in sectors with strong fundamentals and continued momentum, such as defence and railways.
Q) How fixed income market will move in 2025 amid the rate cut cycle?
A) The fixed income market in 2025 is certainly offering a favourable phase for risk averse investors. With inflation easing to 3.16% in April ‘25 and the RBI lowering the repo rate to 6%, there is room for further policy easing.
As yields soften, we expect strong interest in medium- to long-duration bonds, and see this as a good window for clients to lock in attractive yields.
Fiscal consolidation, India’s inclusion in global bond indices, and a stable macro environment are further strengthening the outlook.
Q) How should one play the small & midcap space?
A) Despite some relief from recent market consolidation, valuation concerns persist in certain small and mid-cap segments, as many stocks remain disconnected from their earnings growth potential.
In this environment, the best approach is to be highly selective and focus on quality, fundamentally strong companies with robust financials and sustainable business models.
Avoid chasing momentum or liquidity-driven rallies, as overvalued names remain vulnerable to corrections, especially if triggered by global or domestic events.
Q) Defence stocks have come back on the table after the recent dip amid rising tensions between India & Pakistan. Do you see the trend to continue?
A) Defence stocks have rallied nearly 45% since April 7, 2025, driven by the success of indigenous defence equipment during the India-Pakistan tensions and robust government support for promoting domestic defence manufacturing.
Although the sharp rally has led to stretched valuations, the sector remains a compelling long-term investment opportunity.
Ongoing geopolitical uncertainties and security challenges are expected to push India’s defence budget—currently at 1.9% of GDP—higher in the coming years, providing further momentum to the sector.
That said, investors should stay selective and stick to companies with strong fundamentals and long-term growth potential.
Q) The US-China tariff announcement supported risk-on sentiment and we saw a quick rally and even the FIIs are also making a comeback. How do you see the global picture evolving in the next few months?
A) Markets don’t wait for certainty—they move with clarity. The US-China tariff rollback has provided just that, sparking a rally in equities and pulling FIIs back into the game.
This cooling-off period is good news for trade flows and investor sentiment, at least through mid-August. But beyond the headlines, the bigger picture will be shaped by how global policymakers and central banks maintain supportive policies.
While geopolitical risks and inflation remain key concerns, improving macroeconomic indicators and easing trade tensions could support sustained global equity inflows.
For now, momentum has returned—staying selective and globally aware will separate the noise from the real opportunities.
Q) What is your take on Gold, especially after a stellar run we have seen for the past 3 years?
A) In times of uncertainty, gold shines brightest. The yellow metal did its job. Over the past three years, it has gained over 56% on domestic exchanges, driven by global volatility, safe-haven demand, and a weaker dollar.
While recent easing in geopolitical tensions has led to some cooling, the long-term outlook remains strong. Any dips should be viewed as buying opportunities.
That said, with inflationary risks and global uncertainty still in play, gold remains a strategic portfolio asset—not just a tactical trade.
Q) Which sectors are now looking attractive?
A) Several sectors are showing promising opportunities as the market gains momentum. We are seeing a turnaround in cement, driven by volume growth and easing competition, which is improving margins.
Life insurance is becoming more attractive with valuations stabilizing and regulatory concerns fading.
Affordable housing finance also stands out, supported by expected rate cuts and strong asset quality. On the broader market front, defence and autos have led recent gains, while IT shows signs of renewed strength after early-year challenges.
That said, FMCG remains cautious territory given margin pressures and uncertain demand. For investors, selective exposure backed by strong fundamentals will be a key to navigating this evolving landscape.
In this market, stay disciplined—no shortcuts. Quality is the way to win.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Emphasizing the importance of discipline and data-driven decision-making, Sidana cautions against chasing momentum and urges investors to focus on building resilient portfolios backed by fundamentals.
From defence and cement to fixed income and gold, he outlines the key sectors and strategies that can help investors create real, sustainable wealth in an unpredictable market environment. Edited Excerpts –
Q) Thanks for taking the time out. Let me get your perspective on the market. We have seen a lot of action on D-Street amid tariff and geopolitical situation between India & Pakistan. How do you manage to dodge the volatility?
A) It is always a pleasure interacting with you!
Volatility is an intrinsic part of the capital markets, and it is particularly evident during events like geopolitical flare-ups or tariff uncertainties. For a broking house, it’s never about predicting the next headline. It’s about staying prepared, always!
In periods of high tension, like the recent India-Pakistan developments, we rely on data-driven insights—especially stock beta analysis—to gauge market sensitivity and adjust exposure swiftly.
This helps to stay aligned with long-term goals while managing real-time risk. There is no one-size-fits-all formula for retail participants. Markets reward resilience, not impulse.
Never should you chase the momentum—but build on mechanisms. The real wealth is built on strategy, not speculation.
Q) How are you reading the micro and earnings picture for the next few quarters?
A) After a volatile start to 2025, Indian equities have staged a strong rebound, supported by easing geopolitical tensions, renewed FII inflows and more favourable trade developments.
Domestically, the macroeconomic environment is becoming increasingly supportive—retail inflation has declined to 3.16%, credit growth is projected to grow above 12%, and the RBI has initiated its rate-cut cycle, improving overall liquidity. The IMD’s forecast of an above-normal monsoon is also positive for lifting rural sentiment.
On the earnings front, the March quarter results have largely met expectations, showcasing broad-based sectoral strength. Looking ahead, we expect corporate earnings to remain resilient, with Nifty50 earnings likely to grow by 11–13% in FY26.
Despite global headwinds, India’s strong fundamentals and policy tailwinds continue to support its premium valuation narrative in global markets.
Q) Amid the volatility, what are the queries that you are receiving from your clients?
A) In this environment of heightened volatility, clients are primarily seeking clarity and direction on how to navigate the uncertain conditions. Capital protection is top of mind, with many asking whether it makes sense to partially move into debt or hybrid products.
There’s also strong interest in the sharp rally we have seen in sectors like defence and railways. Investors are keen to understand whether these moves are sustainable and where the next opportunities might lie.
We are also getting a lot of technical queries—around hedging strategies using options, insights from open interest build-up, and how FIIs are positioned in index and stock futures.
At the same time, many investors are seeking guidance on whether to stay the course with their SIPs and how to think about sector rotation in this evolving market landscape.
Q) Mutual funds increase cash allocation by Rs 17,300 crore to Rs 2.23 lakh crore in April. Are you also following a similar trend and using dips to enter markets?
A) Yes, we are observing this trend closely. The rise in mutual funds' cash allocations reflects a cautious yet opportunistic approach in the face of ongoing market volatility. Elevated cash levels suggest that fund managers are staying nimble, ready to deploy capital during market corrections.
From our side, we’re advising clients to remain selective and use market dips strategically—particularly in sectors with strong fundamentals and continued momentum, such as defence and railways.
Q) How fixed income market will move in 2025 amid the rate cut cycle?
A) The fixed income market in 2025 is certainly offering a favourable phase for risk averse investors. With inflation easing to 3.16% in April ‘25 and the RBI lowering the repo rate to 6%, there is room for further policy easing.
As yields soften, we expect strong interest in medium- to long-duration bonds, and see this as a good window for clients to lock in attractive yields.
Fiscal consolidation, India’s inclusion in global bond indices, and a stable macro environment are further strengthening the outlook.
Q) How should one play the small & midcap space?
A) Despite some relief from recent market consolidation, valuation concerns persist in certain small and mid-cap segments, as many stocks remain disconnected from their earnings growth potential.
In this environment, the best approach is to be highly selective and focus on quality, fundamentally strong companies with robust financials and sustainable business models.
Avoid chasing momentum or liquidity-driven rallies, as overvalued names remain vulnerable to corrections, especially if triggered by global or domestic events.
Q) Defence stocks have come back on the table after the recent dip amid rising tensions between India & Pakistan. Do you see the trend to continue?
A) Defence stocks have rallied nearly 45% since April 7, 2025, driven by the success of indigenous defence equipment during the India-Pakistan tensions and robust government support for promoting domestic defence manufacturing.
Although the sharp rally has led to stretched valuations, the sector remains a compelling long-term investment opportunity.
Ongoing geopolitical uncertainties and security challenges are expected to push India’s defence budget—currently at 1.9% of GDP—higher in the coming years, providing further momentum to the sector.
That said, investors should stay selective and stick to companies with strong fundamentals and long-term growth potential.
Q) The US-China tariff announcement supported risk-on sentiment and we saw a quick rally and even the FIIs are also making a comeback. How do you see the global picture evolving in the next few months?
A) Markets don’t wait for certainty—they move with clarity. The US-China tariff rollback has provided just that, sparking a rally in equities and pulling FIIs back into the game.
This cooling-off period is good news for trade flows and investor sentiment, at least through mid-August. But beyond the headlines, the bigger picture will be shaped by how global policymakers and central banks maintain supportive policies.
While geopolitical risks and inflation remain key concerns, improving macroeconomic indicators and easing trade tensions could support sustained global equity inflows.
For now, momentum has returned—staying selective and globally aware will separate the noise from the real opportunities.
Q) What is your take on Gold, especially after a stellar run we have seen for the past 3 years?
A) In times of uncertainty, gold shines brightest. The yellow metal did its job. Over the past three years, it has gained over 56% on domestic exchanges, driven by global volatility, safe-haven demand, and a weaker dollar.
While recent easing in geopolitical tensions has led to some cooling, the long-term outlook remains strong. Any dips should be viewed as buying opportunities.
That said, with inflationary risks and global uncertainty still in play, gold remains a strategic portfolio asset—not just a tactical trade.
Q) Which sectors are now looking attractive?
A) Several sectors are showing promising opportunities as the market gains momentum. We are seeing a turnaround in cement, driven by volume growth and easing competition, which is improving margins.
Life insurance is becoming more attractive with valuations stabilizing and regulatory concerns fading.
Affordable housing finance also stands out, supported by expected rate cuts and strong asset quality. On the broader market front, defence and autos have led recent gains, while IT shows signs of renewed strength after early-year challenges.
That said, FMCG remains cautious territory given margin pressures and uncertain demand. For investors, selective exposure backed by strong fundamentals will be a key to navigating this evolving landscape.
In this market, stay disciplined—no shortcuts. Quality is the way to win.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
