Siddharth Purohit of InvestValue Capital forecasts a 10-year bull market driven by monthly SIP inflows of Rs 32,000 crore. While bullish on manufacturing and exchanges, he suggests caution toward banking and insurance due to rising asset quality concerns and inflation.
Siddharth Purohit, Equity Fund Manager at InvestValue Capital, believes the Indian capital markets are entering a decade-long period of growth. This outlook is supported by strong retail participation, highlighted by monthly Systematic Investment Plan (SIP) inflows currently reaching around Rs 32,000 crore. This consistent flow of money provides a cushion of liquidity that keeps the market supported.
However, investors should look beyond just the index levels. Recent data shows that the Nifty’s one-year forward price-to-book (P/B) ratio has touched a six-year low, dropping below 2.96 times. While this may suggest valuations are cooling, the market is not necessarily 'cheap' in real terms. Analysts note that changes in how the Nifty is calculated—moving from standalone to consolidated financials in 2023—have structurally changed how we read these ratios, making earnings quality more important than ever.
Sectoral Opportunities and Risks
Purohit remains positive on financial market infrastructure, specifically exchanges, wealth management firms, and asset management companies. Outside of finance, he sees potential in the industrial and manufacturing sectors. Specifically, power ancillary companies, defense manufacturers, and auto component makers are benefiting from long-term themes like energy demand and vehicle electrification. He also noted a stable outlook for aluminum producers, where tight global supplies are creating a favorable environment for select players.
On the flip side, the fund manager maintains a cautious stance on the banking and non-banking financial company (NBFC) sectors. The primary concerns here include the potential for rising bad loans (non-performing assets) and the impact of near-term inflation on retail borrowers. Similar caution extends to the insurance industry, where profitability is being tested by these same macroeconomic pressures.
Earnings and Macro Context
The market’s resilience has been anchored by positive earnings. Quarter 1 of FY27 saw many mid and small-cap companies reporting double-digit growth and improved profit margins, signaling that businesses still have the power to maintain prices even in a competitive environment. Looking at the broader economy, Purohit projects a 6.7 percent GDP growth for FY27. While volatility remains a risk—particularly due to fluctuations in global oil prices—the consistent growth narrative appears intact. As the market moves toward the September quarter earnings season, the key focus for investors will be whether companies can maintain this earnings momentum against the backdrop of changing valuation metrics and inflation pressures.