Bajaj Finserv AMC’s CIO highlights home improvement, metals, and chemicals as contrarian picks while warning of geopolitical risks and global policy headwinds in the year ahead.
Samvat 2081: Resilient but Volatile
Samvat 2081 delivered strong equity gains, yet it was not without volatility. While Indian equities showcased strength, global uncertainties, sectoral underperformance (notably IT and FMCG), and persistent foreign institutional outflows created pockets of weakness.
- Nifty navigated macro headwinds to post modest returns.
- Banking and auto sectors outshone others, while export-dependent sectors lagged.
- Gold rallied over 59%, outpacing most asset classes.
Key Risks for Samvat 2082: Global Politics & Trade Tensions
According to Nimesh Chandan, the biggest risk for equity investors lies in geopolitical uncertainty.
- Ongoing trade and tariff wars could destabilize global supply chains.
- Currency volatility, rising oil prices, and inflation shocks may weigh on sentiment.
- A Trump-led comeback, Fed policy surprises, or sharp changes in capital flows could spook markets.
Despite structural reforms like GST 2.0 strengthening India’s domestic foundation, these external shocks remain key threats.
Domestic Demand Revival: The Core Opportunity
India is entering a cyclical upturn, says Chandan, as domestic demand revives and corporate earnings recover.
- Sectors linked to discretionary consumption, credit, and real estate are expected to lead the next rally.
- A stable interest rate environment and urbanization trends support continued growth.
- With reforms progressing and macro fundamentals holding steady, India is poised to outperform.
Sectoral Strategy: Focus on Cyclical and Rate-Sensitive Plays
Chandan remains bullish on three core segments for Samvat 2082:
1. Consumption
- Riding on improving rural and urban income dynamics.
- Boosted by festival spending, premiumization, and a favourable demographic profile.
2. Financial Services
- Banks and NBFCs benefit from rising credit demand and robust asset quality.
- Insurance continues to gain ground as financial literacy grows.
3. Real Estate & Home Improvement
- Urban housing cycle is rebounding after a two-year lull.
- Sectors like paints, electricals, plywood, and tiles are picking up momentum.
Contrarian Bets: Metals and Chemicals Shine
Chandan identifies three non-consensus sectors for outperformance:
Home Improvement
- Under-owned and overlooked, yet structurally supported by housing demand.
Metals
- Despite being cyclical, strong China stimulus and infrastructure demand could spur prices.
- Inventory normalization may drive price recovery.
Chemicals
- Select companies poised to benefit from China+1, specialty chemicals growth, and domestic capex.
These areas offer attractive valuations and room for re-rating if macro tailwinds align.
Gold & Silver Outlook: Durable Demand Drivers
Despite a 59% rally in Samvat 2081, Chandan sees continued strength in gold, backed by:
- Central bank buying at ~80 tonnes/month — five times pre-2022 levels.
- Rising fiscal deficits and monetary easing pressuring the US dollar.
- Emerging markets diversifying reserves, increasing gold accumulation.
Silver, while more volatile, remains in a bullish phase. After the recent rally, a short-term pause or correction is expected, but long-term outlook stays positive.
Global Influences: US Policy, Tariffs & Fed Watch
Chandan notes that while US Fed policy and tariffs often trigger knee-jerk reactions, India’s underlying fundamentals remain resilient.
- India’s reform momentum—including investment-friendly policies and GST 2.0—provides a buffer.
- Any progress in India–US trade talks and rollback of additional 25% tariffs will further boost investor confidence.
Underweight Sectors: IT and Utilities
Chandan advises caution on:
IT Services
- Headwinds from a potential US slowdown and persistent tariff-related uncertainties.
- Margin pressure and delayed enterprise tech spending limit near-term upside.
Utilities
- Slower regulatory clarity and inconsistent demand growth reduce sector appeal.
Return Expectations: 10–15% Upside Possible
With earnings visibility improving, Chandan expects 10–15% equity returns in Samvat 2082.
- Valuations are reasonable in several sectors.
- The earnings upcycle is expected to drive broad-based market performance.
- Cyclicals, rate-sensitives, and contrarian plays may offer the highest alpha opportunities.
Nimesh Chandan of Bajaj Finserv AMC expects Samvat 2082 to offer 10–15% returns, led by domestic demand revival. He bets contrarian on home improvement, metals, and chemicals, while warning of global geopolitical risks and trade tensions that may cloud the outlook.