Indian market enters tougher phase as easy gains fade, stock picking becomes key: Ambit

Indian equities are moving into a more demanding phase, where broad-based gains are giving way to selective opportunities and sharper differences across stocks. Dhiraj Agarwal, Managing Director at Ambit Investment Managers, says the market no longer offers easy, momentum-driven returns. “Easy, easy, easy money is not there. It’s back to basics. There are money-making opportunities, but it’s harder. It will require some real hard work and incisive research,” he says.

Agarwal describes the current environment as one without clear leadership themes. “This is the first time, probably in the last 25–30 years, it’s a completely themeless market,” he says, adding that the absence of a dominant sector makes investing more complex. “Will a sector do meaningfully better than another is a huge question mark. So, it’s a stock picker’s market,” he adds.

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Even as global tensions ease, he does not expect a sharp rally. “With de-escalation, the immediate large risk to the market goes away, but I wouldn’t say it’s very exciting or bullish,” he says. Instead, he expects a period of consolidation. “We go back into a sideways consolidation zone for maybe another year more.”

He also points out that India is lagging behind its global peers. “Taiwan is almost close to life highs, US markets are very close to life highs, India is still lying 10% down,” he says, adding that “we are lacking engines of growth.”

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In this backdrop, returns will depend more on company selection than sector bets. “In every sector, we will find buy and sell opportunities,” Agarwal says, stressing the need to focus on earnings and valuations. He highlights the growing divergence within sectors, saying “ABB could be a buy, but Siemens could be a sell, Axis Bank could be a buy, and ICICI Bank could be an avoid.”

Market data reflects this shift. “Only 125 stocks out of BSE 500 are positive, the top 10 names are up between 25% to 50%,” he notes, showing how gains are concentrated. “In a market where only 20–30% of the names give you decent returns, you can see how difficult the investment job is,” he adds.

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On flows, domestic inflows remain steady for now. “I don’t see that number slowing down yet; the risk seems pretty low,” he says. However, he flags a concern. “The dry gunpowder is running out,” referring to lower mutual fund cash levels after absorbing foreign selling.

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