Indian equities have been treading water for over a year, with the Nifty struggling to break past its September 2024 highs and a large swathe of companies trading below year-ago levels. For investors, this prolonged phase of muted returns has sparked both caution and questions on whether recovery is in sight.
At the same time, macroeconomic indicators, from government-led capex to resilient domestic demand, are beginning to show green shoots, setting the stage for what could be a more constructive second half of 2025.
In this backdrop, BW Businessworld caught up with Ssuneet Kabra, Co-founder and CEO, Equitree Capital, to decode the market trajectory, sectoral earnings outlook, RBI policy stance and opportunities in volatile times.
Kabra also shared insights on how Portfolio Management Services (PMS) can add value, his team’s approach to valuing infrastructure-linked businesses, and why disciplined equity ownership, rather than asset class timing, remains the surest way to generate long-term wealth.
Edited excerpts:
It’s been over a year since the Indian market has produced no returns and remains negative. Do you see a recovery by year-end?
On a trailing twelve months basis, Indian equities have been largely stagnant. Historically, markets have delivered positive returns in 8 out of 10 years, and past corrections have typically lasted 15 to 18 months before giving way to recovery. We think that pattern is likely to reassert.
The set-up into the second half (H2) 2025 looks constructive. The Nifty remains below its September 2024 peak, and nearly two-thirds of Nifty 500 companies are trading below their levels a year ago, suggesting that caution and pessimism are already reflected in prices. At the same time, macro indicators such as government-led capex, steady earnings in select sectors, and resilient domestic demand are beginning to re-accelerate.
If this momentum sustains, we believe the H2 of 2025 should see a recovery, likely in the high single digits to low double digits. Importantly, the recent breadth correction in small and midcaps has helped reset valuations and investor expectations, which in turn creates a healthier base for forward returns once earnings begin to come through.
Q2 earnings are approaching, do you expect positive growth or disappointment?
We do not expect uniform outcomes across sectors. Some pockets will surprise positively while others may lag. Infrastructure ancillaries are poised to do well, driven by the capex revival and strong order books. On the consumer side, festive demand and dispatches already underway should help a few well-run companies deliver a decent uptick in Q2.
Early festive reads are supportive, with e-commerce festive sales projected at about Rs 1.2 lakh crore this season, which should aid autos and select FMCG. In our own portfolio, about 75 per cent of holdings reported around 19 per cent profit after tax growth in Q1, and we expect a similar outcome in Q2 as well. Broadly, our expectation is modest overall growth, with visible strength in quality names and structurally aligned sectors.
Do you see the RBI cutting rates in the next policy to stimulate further growth?
A rate cut is plausible, though not guaranteed. The RBI is balancing domestic growth, inflation, and the global backdrop. On the domestic side, momentum remains healthy with Q1 FY26 GDP at 7.8 per cent, though forecasts for the full year have eased closer to 6.5 per cent as global trade and tariff headwinds weigh. Inflation is benign, with CPI around 2 per cent, which gives policy space if growth risks intensify.
At the same time, the RBI has already reduced the repo rate by 100 bps earlier this year to 5.5 percent, and then paused in August. With the rupee under pressure and global monetary policy still uncertain, the central bank may prefer a neutral, wait-and-watch stance in October. A cut remains on the table, but the RBI is likely to prioritise stability, letting the transmission of past cuts play out before acting again.
In such times when the market remains volatile and uncertain, how does a PMS help investors?
The greatest value a PMS brings in volatile markets is framing the right expectations. Volatility is not an exception, it is the cost of compounding. A disciplined PMS educates clients, provides transparency in decision-making, and ensures investors remain anchored to long-term outcomes rather than short-term swings.
Where a PMS like us truly differentiates itself is in giving sophisticated investors and family offices access to under-researched small and micro-cap businesses, segments that usually remain outside the scope of mutual funds or larger vehicles. These overlooked areas often combine both strong earnings growth and attractive valuations, creating fertile ground for differentiated alpha.
How do you value infrastructure or infrastructure-adjacent stocks in the present market conditions?
We remain bullish on infrastructure as a structural theme. India’s National Infrastructure Pipeline envisaged over Rs 111 lakh crore of investments between FY20 and FY25, and we continue to see strong policy support across roads, railways, power, and urban development. This scale of spending ensures infrastructure remains the backbone of India’s growth story.
Around 20 to 25 per cent of our portfolio is aligned to infrastructure and capital goods, either directly or through adjacencies. In valuing such companies, we consciously look beyond headline price to earnings (PE) multiples. What matters more is the quality and visibility of the order book, conversion of EBITDA into operating cash, execution track record and balance sheet strength. These factors determine whether growth can sustain through cycles.
In terms of valuation, which asset class appears attractive, silver, gold, bitcoin or Nifty 50 index?
From an asset allocation perspective, silver and gold have significantly outperformed in 2025, supported by global risk aversion, central bank buying, and currency weakness. Bitcoin too has delivered strong returns, albeit with its usual volatility, while the Nifty has remained range-bound. For sophisticated investors, these choices are about portfolio balance, liquidity and risk appetite.
However, our lens is different. We are not in the business of timing asset classes, we are in the business of owning high-quality businesses that can compound value over decades. Our focus is on under-researched segments of the Indian market where strong earnings growth and attractive valuations coexist, and where patient capital can generate differentiated alpha.
That discipline, staying invested in businesses rather than chasing asset class cycles has proven, in our experience, to be the most reliable way of creating long-term wealth. |
