He explained that the recent escalation in the Middle East is being viewed as a regional conflict with limited spillover risk. While oil has risen from $65 per barrel to around $78/bbl, indicating a pricing-in of some risk premium, Murarka believes global risk appetite hasn’t materially declined, and markets are assuming Iran won’t take extreme steps.
Murarka highlighted that India’s economic foundation is exceptionally strong, pointing to what Finance Minister Nirmala Sitharaman recently described as the strength of the five key balance sheets: government, external, corporate, banking, and household. “I am seeing such healthy corporate and bank balance sheets in India, almost after a gap of 20 years,” he said. These fundamentals support India’s resilience amid global uncertainty.
Because of this strong macro backdrop, Murarka remains optimistic about the Indian equity market. He expects the Nifty index to deliver low-teens returns over the next year and maintains a positive medium-term view, especially for investors with a 2–3-year horizon.
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He is particularly bullish on the consumption recovery, especially staples. With India’s $4 trillion economy being 60% consumption-driven, and private final consumption itself worth $2.4 trillion, Murarka sees a cyclical rebound ahead. “Valuations have now normalised… and earnings growth will accelerate,” he said, adding that consumer companies could offer mid to high-teens returns with limited downside risk.
On the other hand, Murarka believes valuations in the defence sector are now too rich for value-oriented investors. While structural tailwinds are in place, he warned that “momentum can fade quickly” and that it’s difficult to justify current prices based on near-term earnings. His fund has exited most defence holdings, preferring not to hold stocks where near-term value is hard to justify.
He sees promise in India’s internet sector, where growth may still be underpriced. Despite being in the sixth year of a bull market and operating in what he calls the “most expensive equity market in the world,” Murarka believes internet businesses can deliver positive surprises over the long term due to India’s structural growth.
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He cautioned investors against chasing low-quality names just to find value in a mature bull market. Having learned from past mistakes, Murarka said, “My experience of doing that way back 20 years back has been very bad, and I’ve burnt my fingers very badly.” Instead, he sticks to a bottom-up approach, emphasising the importance of stock picking over macro noise, focusing on companies with strong execution rather than reacting to global headlines.
For the entire interview, watch the accompanying video
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