A) The Q1 FY27 earnings season has been encouraging and, importantly, marks a meaningful improvement in the earnings trajectory. Nifty earnings appear set for a strong rebound, with June-quarter EPS growth expected to exceed 15%, bringing an end to the prolonged phase of largely single-digit earnings growth.

Corporate commentary has been broadly positive, with companies maintaining a constructive outlook on demand, suggesting that demand and cost pressures have been less disruptive than initially feared. Q) Private sector capex announcements have remained subdued over the past 12–18 months.

If this investment cycle continues to be delayed, could it push back the expected earnings growth for India Inc.? What are your views on the outlook for private capex and its impact on corporate earnings?

A) A sustained revival in private sector capex is critical to maintaining India's medium-term growth momentum. While private sector capex announcements have been uneven, above-average capacity utilisation levels suggest that the investment cycle is likely to gain momentum over the coming quarters.

Q) FII inflows have remained largely positive so far in August. Can we say that institutional investors are gradually turning positive on India again?

A) July witnessed positive inflow after four consecutive months of outflow. August has also been tending positively.

It is early days, to talk about the sustainability of FII flows. India continues to benefit from strong macroeconomic fundamentals and a resilient domestic growth outlook.

Ultimately, flows follow earnings growth. So, if earnings growth is coming back, I would expect flows also to play catch-up.

Q) Following the correction in the first half of 2026, have valuations become more reasonable? If not, can India continue to command a premium over other emerging markets?

7x FY27E and 17x FY28E are trending below long-term averages. Nifty valuations remain reasonable in the context of earnings growth bouncing back and improving macro stability due to lower crude oil price, though near-term volatility may persist given global uncertainties.

The correction over the last couple of years has made valuations more reasonable. However, India still trades at premium to most emerging markets, which I believe is justified given superior long-term growth prospects.

Q) Are there pockets of froth in the market that investors should avoid? As a thumb rule, investors should be cautious, where valuation multiple becomes very high as compared to underlying EBITDA/ earnings growth.

Q) Which sectors continue to offer attractive valuations despite the recent rally? A) Despite the recent rally, we continue to find attractive opportunities in select pockets of the market.

Some of the sectors on our radar include Financials, Healthcare, particularly CDMOs and Hospitals, Capital goods & capex beneficiaries, Digital platforms, and companies benefiting from the manufacturing and supply chain diversification. Q) How do you view the revival of IPO activity after a few months of subdued issuance?

A) The revival in IPO activity is a constructive signal and signifies maturing of Indian capital markets and availability of ample liquidity. Investors are becoming more valuation conscious now in the primary market.

Further, a healthy IPO pipeline provides access to new business models and new sector investment opportunities.