It almost seems like we are dried up of cues. The RBI also fired a big bazooka. What next? Do you think it is now really towards the US and China and what comes out of that 90-day hall on tariffs?
Shibani Sircar Kurian: Yes, we have had an exciting week with a lot of policy action. But what has been a standout for us in the market has been that domestically, most of the macro parameters, especially in context of what is happening globally with the trade and tariff war as well as geopolitical tensions, domestic macro seems to be holding up fairly reasonably well and, of course, the policy push from a monetary side which we have seen over the last week or rather this entire calendar year to date and liquidity improving overall. The other factor is that the market will clearly focus on the earnings trajectory.
So, when one looks at Q4 FY25 earnings, despite the fact that expectations were muted, the earnings delivery was better than expectations, especially where the largecaps and a select few midcaps were concerned and therefore, that sets the trend in terms of how earnings possibly pans out for FY26. On a mid single-digit earnings delivery for 25, now the consensus expectation for FY26 is of double-digit earnings growth and if the domestic macro continues to hold up and there is support in terms of growth from a policy perspective, hopefully earnings should start to improve at a moderate pace and that should be the factor that the market looks out for.
From a valuation standpoint, our markets are not cheap and given the current run-up, we believe that from a risk-reward perspective, largecaps still continue to be better placed than mid and smallcaps. But there are opportunities in mid and smallcaps and therefore, one has to be more bottom-up in that segment. The mid and smallcaps continue to trade at a premium to their long-term average multiples.
We spoke about a couple of triggers that have led to some sharp market moves, be it the Budget and followed by that, you have the policy, you have earnings. What is the next big trigger that could shape the next trend for the market? Could it be monsoons? We are predicted to have a healthy monsoon this time around. Do you see any turnaround in overall consumption?
Shibani Sircar Kurian: Consumption is a space where we believe there are quite a few triggers. One, as you rightly mentioned, the Budget set the tone with the tax benefits that were given to the middle income and the mass segments, and therefore that should help in terms of boosting consumption.
The second is, of course, interest rates have come down with the RBI cutting policy rates by 100 basis points calendar year to date and the CRR cuts which are to follow. From that perspective, the interest rate burden on the consumer should also start to come down. The third factor for consumption is the monsoons. Hopefully, as per what has been the initial estimates, monsoons this time around are normal and that will help in terms of boosting rural income. When you look at the income buckets within rural and urban areas, we have been seeing that rural income levels have started to improve and with inflation coming down, real rural wages have improved considerably over the last year and that is possibly supporting demand.What has been missing has been the urban mass consumption demand and hopefully now with rates being cut and the impact from the Budget will help in terms of higher disposable income. Some amount of that urban consumption should start to come back and therefore, the consumer discretionary pack, especially in terms of mass consumption, is a segment that should likely benefit in this current policy environment and overall macro environment.
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