Rate-sensitive sectors and domestic healthcare offer opportunities, says Ashwini Agarwal

This is one of those markets where finding mispricing has become very difficult, said Ashwini Agarwal, Founder and Partner at Demeter Advisors. “Almost everything is priced well.” However, he added that rate-sensitive sectors could be worth considering. “Life insurance companies could be an area one can look at,” he said.

He also pointed to domestic healthcare and Real Estate Investment Trusts (REITs) as options. “Most of the REITs that are listed have a potential of about 12 to 13% Internal Rate of Return (IRR) over the next 12 months,” he said.

In the auto component and non-banking financial companies (NBFCs) spaces, performance has varied widely. Agarwal suggested looking through underperforming stocks in these sectors for potential value. “There are some value pickings there which look good to me,” he said, referring to NBFCs. Even in the domestic consumer segment, which has seen weak demand, he mentioned there are “a couple of stocks that look very good or promising.”

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On the broader market, Agarwal believes that despite geopolitical risks, liquidity and hopes of improved growth are keeping Indian markets afloat. “Households continue to pump money into the markets, and that’s driving it,” he said. While oil prices are rising due to tensions in the Middle East, he noted that “the market seems to be sort of not taking notice.”

Still, Agarwal does not expect major gains in the near term. “This is going to be a year of single-digit returns, possibly,” he said. He cautioned that outcomes may vary – from markets doing nothing for a while to dipping and then recovering – but emphasised that predicting such moves is tough.

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He also believes the worst might be over for Indian equities. “The big downside was caused by earnings downgrades. The pace of downgrades seems to be reducing,” he said. With the Reserve Bank of India (RBI) easing liquidity and lowering rates, and expectations of government-led capex in areas like railways and defence, he said corporate investment could pick up later this year.

Still, he acknowledged that the Nifty outlook remains uncertain. “Could we go down to 23,500–23,600 before we hit new highs from here? I can’t say.” But barring any sharp escalation in global conflict, Agarwal concluded, “the bottom is behind us.”

For the full interview, watch the accompanying video

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