India growth story intact, be mindful of short-term hiccups: Vinay Paharia, PGIM India Mutual Fund

Vinay Paharia, Chief Investment Officer of PGIM India Mutual Fund, has expressed a cautiously optimistic outlook on the stock market as it rebounds from the March 25 lows. According to Paharia, while volatility and macroeconomic slowdowns persist, there is potential for improvement in consumption demand thanks to tax cuts, reduced interest rates, and lower inflation, which could collectively boost disposable incomes.

As the fourth quarter of FY25 results continue to unfold, Paharia notes a sense of cautiousness, particularly within the IT and FMCG sectors. Despite this, financials are holding steady, although they are not immune to possible margin pressures. Notably, the decline in crude oil prices presents a favourable opportunity for India, as it could enhance fiscal flexibility due to the country's dependency on energy imports.

Paharia remains vigilant regarding global trade, pointing out that while India is currently favourably positioned, the broader implications of tariffs and their recessionary impacts on global growth cannot be ignored. He emphasises the importance of maintaining a constructive outlook on India's growth narrative while being aware of potential short-term challenges.

India continues to stand out as a high-growth economy, being the world's fourth-largest by some measures. Paharia is optimistic about various sectors, including the financialisation of the economy, the premiumisation trend in consumption, the expansion of the digital economy, and growth in the healthcare sector. These areas are expected to drive significant economic advancement.

In terms of corporate performance, the fourth quarter results reported by 153 Nifty 500 companies show a 5% year-on-year and quarter-on-quarter revenue growth. Net adjusted earnings have seen similar increases, highlighting resilience in the face of broader economic challenges.

Non-BFSI companies have shown robust growth, with a 5.6% year-on-year and 4.7% quarter-on-quarter increase in revenue, coupled with a rise in net adjusted earnings. This growth remains notable even when excluding commodity sectors, where the earnings growth is slightly tempered.

For BFSI companies, revenue growth stood at 3.5% year-on-year and 5% quarter-on-quarter, with net adjusted earnings following a similar trend. This steady performance underscores the sector's critical role in the broader economy, despite existing challenges.

Paharia's insights underline a balanced approach towards navigating current market conditions, acknowledging both the opportunities and risks present. As such, investors are advised to remain vigilant but optimistic, aligning their strategies with the evolving economic landscape.