Speaking to ET Now, Srinivas Rao reveals, CIO, Bajaj Life That said, such moves aren’t new in the markets — but they may carry more weight than recent corrections.
“Yes, it was a tough day, but we’ve seen days like this in the past. I’ve been in the market for 30 years … Right now, it looks more serious than what we’ve seen in the past.”
He noted that while markets have rebounded sharply over the past three to four years, the current structure combines weak sentiment with soft earnings.
“We’ve just finished third quarter earnings, and even that wasn’t great. We’ve actually seen lower earnings…the combination of weak sentiment followed by not-so-great earnings growth is what’s affecting the markets.”
However, returns are measured in values.
“When I look at values 19 times a year, are they compelling? The answer is no. But are they comfortable? The answer is definitely yes.”Domestically oriented sectors benefit
Rory emphasized that India is not the only one facing pressure, as the global equation has also been corrected.
“It’s not just India, equity markets as a whole are down. So it’s a relative world.”
Given the tariff-related uncertainties and global volatility, his portfolio position is skewed towards domestic growth themes.
“Our preference … is more towards sectors that depend on domestic growth … consumer discretionary, auto, pharma will be our top weight at this time.”
Defense Rally: Construction Story, Value Caution
Defense counters such as Bharat Electronics Ltd and Bharat Dynamics Ltd saw a surge in performance amid expectations of higher defense spending.
Rory accepted the opportunity to form.
“Every country will spend more on defense than what they spent in the last 5, 10, 15 years … We will buy more Indian than what we used to do.”
But he cautioned that the values are exaggerated. “Many of these companies are trading at more than 50-60% to earnings… the margin of safety at that price is certainly very low.”
He added that high multiples call for a strong vision. “When you are paying a PE of 40-50, you expect 25-30% earnings growth for the next three-four years… otherwise I would not recommend buying on the same day.”
Fuel and tactical opportunities
Top oil companies such as Oil and Natural Gas Corp. have held up well as crude prices have risen.
“If you’re producing oil … as prices go up … they’re going to see a natural increase in their revenues and profits.”
Rowry noted that while tactical plays are possible, the path to valuations and earnings remains central to stock selection.
“What’s more important is A) revenue growth and B) the way that revenue grows… Upstream, you have value on your side and there’s also a potential increase in revenue.
front road
With valuations close to 19 times forward earnings, the market may not be cheap — but neither is it hot. A lot will depend on how geopolitical tensions play out and whether earnings stabilize in the coming quarters.
