Which sectors are poised to gain currently? Shripal Shah, MD & CEO of Kotak Securities, explains

With domestic markets experiencing high volatility, Indian investors are changing the way they invest and where they turn for advice. In this exclusive interaction with Business Today, Shripal Shah, MD & CEO of Kotak Securities, shares his views on where the Indian equity market stands amid global uncertainty, how digital tools are changing the way people invest, and what role full-service brokerages will play going forward. From margin trading to tech-driven platforms, Shah explains the key trends shaping the future of investing in India. Edited excerpts:

How do you see the Indian equity market positioned amid global volatility?

In the short term, we're facing some pressure. Q1 earnings have been relatively muted across multiple sectors, and foreign institutional investors have continued to sell. At around 22x forward PE, India appears expensive to global investors, which explains why we've underperformed other emerging markets recently. However, domestic flows remain robust. This feels more like a consolidation phase rather than a structural concern.

Looking ahead to Q2 and Q3, the picture seems brighter. The recent RBI rate cut should stimulate demand, particularly with the festive season approaching. A healthy monsoon could further spur rural recovery and support consumption. Additionally, if the anticipated trade deal with the U.S. materialises, it could uplift near-term market sentiment.

So while near-term caution is justified, the medium-term outlook is optimistic. India's structural growth story is very much intact—it’s about giving the cycle time to evolve.

Which sectors are best positioned to benefit from the current environment?

Hospitals, capital market-linked businesses, and digital-first companies continue to be in the spotlight, drawing sustained interest from informed investors and institutions. Meanwhile, large-cap banks, leading NBFCs and housing finance companies are poised to benefit from the CRR cut expected from September 2025 onwards, which should improve liquidity and support credit growth.

What’s your outlook on PSU sector stocks, particularly in banking and defence?

Over a 2-3-year horizon, we remain positive on both defence and PSU banking. The defence sector enjoys a robust order book, ensuring sustained growth. Meanwhile, banking stands to benefit from the ongoing rate cut and expected CRR reduction cycle. That said, valuations look stretched in the near term, particularly for FY26, which could result in price corrections. A disciplined 'buy-on-dips' approach would be prudent here.

What global factors are influencing investor sentiment right now?

Geopolitical tensions have eased, which is positive. But uncertainties around tariffs and reciprocal trade measures remain. The global environment is fragile, and much will depend on how quickly the U.S. finalizes its tariff structures. That decision could restore stability and level the playing field for many nations and corporates.

How the role of full-service brokerages is evolving as digital adoption grows across India? 

As digital adoption deepens—especially among younger, tech-savvy investors—full-service brokerages are evolving to deliver both personalized advice and digital convenience. At Kotak Securities, we offer a complete suite of financial services, from trading to wealth management, under one roof.

What sets us apart is our hybrid model: high-touch services like Relationship Managers, dealers, and wealth advisory, along with our high-tech trading platform, Kotak Neo. It delivers a fintech-grade experience backed by institutional trust. Our 3-in-1 account integration—linking a Kotak Bank savings account with a Kotak Securities trading and demat account—offers a seamless, one-click experience.

Affluent clients, in particular, value this approach. With larger portfolios, they seek a blend of digital agility and personalized, high-trust advisory. The future of full-service broking lies in balancing human insight with digital innovation.

Margin Trading Facility (MTF) is growing rapidly. What's driving this trend?

MTF is gaining ground as a high-reward option among experienced investors. It offers leverage—typically 2x to 4x—while being simpler and safer than derivatives like futures and options. Investors pay part of the stock value upfront, and the broker lends the rest.

Kotak Securities is the second-largest MTF provider in the market with a 15% share. Our Trade Free Pro Plan offers an attractive interest rate of 9.69% annually, making it one of the most competitive offerings. MTF on Kotak Neo is designed to give active traders more control, flexibility, and value.

Many retail investors still hesitate to use leverage. How do you manage that?

Education is key. MTF is inherently a high-risk, high-reward tool. We ensure that customers understand both the mechanics and the risks before they engage.

We provide curated MTF ideas backed by expert research, helping clients make informed decisions. Our e-learning platform, Kotak Stockshaala, offers simple, jargon-free content in English and regional languages. Educational videos and explainers are also available across our digital channels. Our goal is to empower clients, not just provide them with tools.

How do you see the investment landscape evolving over the next 3–5 years, and what could be the emerging opportunities in the broking space?

The investment ecosystem is on the cusp of a transformation. Stronger regulations and governance are making the market safer and more transparent, boosting investor confidence. Meanwhile, the product basket is expanding—beyond equities and mutual funds to include REITs, INVITs, sovereign gold bonds, government securities, ETFs, PMS, and AIFs.

AI will also play a pivotal role—enabling hyper-personalized advisory, real-time portfolio insights, and even automated investment decisions based on individual goals and risk profiles.

Brokers will evolve from being mere transaction facilitators to holistic wealth partners. As newer investors come in and experienced investors look for curated services, the opportunity for brokerages to grow in both scale and scope is immense.

At Kotak Securities, we are committed to leading this change responsibly—by combining innovation with investor-centric services. We want to be a partner in every stage of our clients’ financial journey.