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Nifty may hit a new record high by FY26-end, infra and real estate can rebound: Pranab Uniyal
Pranab Uniyal, Head of HDFC Tru, expects Indian equities to regain momentum with Nifty likely to scale a new record high by the end of FY26. He sees largecaps and domestic-facing sectors as the key drivers, with earnings growth set to recover in BFSI, autos, and consumer discretionary.Edited excerpts from a chat:How are you currently positioning your portfolios amid global headwinds related to tariffs and domestic tailwinds from GST, rate cuts, etc?In the last 6-9 months, we strongly urged our clients to do two things- First: shift away from mid/small caps to large caps because of valuation concerns and second: focus on domestic economy facing sectors like BFSI, Infra, insurance, capital markets etc and be underweight IT and staples. These have benefitted our clients. Overall, our bias towards domestic economy facing sectors remains. We are selectively beginning to see opportunities in the mid/small cap space as well.Policies have increasingly focussed towards supporting growth in the past 12 months with Income tax cuts, rate cuts, and GST rationalisation. These will each boost growth over an extended period of time. Pay commission could be a big theme in CY26.Sensex, Nifty have failed to beat bank FD in the last one year. Do you think that most of the time correction is behind us and that the growth trajectory should be back soon?Market returns will always be lumpy rather than linear. Periods of high returns will alternate with periods of moderate returns. Getting the timing right for these periods is very difficult and mostly not even worth attempting. Investors who try to time these market cycles may miss out on large market rallies and this will likely be costlier in the long term.Expensive valuations and low earnings growth had been a theme in FY25 and we had repeatedly highlighted these concerns. However, we currently see markets as being fairly valued and expect Nifty to rise by 10%. A new high by the end of the fiscal year is strongly probable.FII selling has created pressure on Indian equities. We saw Q1 earnings season doing little to change investor opinion. When do you think we can expect broad-based double-digit earnings growth once again?DIIs' monthly net purchases have exceeded Rs. 60,000 cr in 6 out of the 8 months in CY2025 (including August MTD purchases of Rs. 76,000 cr). DII buying has far outstripped FII selling. We believe the growth outlook at aggregate level will improve from here, as earnings of heavy-weight sectors like BFSI, IT, and consumption have almost bottomed out and should improve from H2FY26. For HDFC Securities’ institutional equities coverage universe, projected earnings growth for FY26E and FY27E stands at 11.7% and 16.4%.Which sectors do you believe will lead the next leg of market growth, and what’s driving your conviction in them?Our preferred sectors are large banks, auto, consumer discretionary, real estate, cement, and capital goods. Domestic fundamentals continue to be fairly strong and these sectors would continue to see strong earnings growth. We remain underweight on oil & gas, mid-cap IT, small banks, and metals. It appears that HNIs are taking a lot of interest in newer assets like REITs and InvITs to earn high yields in a declining interest rate environment. Do you think 7-8% yields are sustainable in the long run from these two assets?Overall, we are positive on both asset classes. High distribution yields of around 6% for REITs and 9-11% for InvITs make a strong case for allocation to these asset classes and provide downside protection to total returns. A further decline in long term bond yields will also support these asset classes. Investors should note that unit prices of InvITs and REITs have exhibited a much higher volatility than the NAV of the units or distribution of cash flows. InvITs have debt-like characteristics, but investors have tended to be momentum chasers. In InvITs, we recommend a contrarian approach where they should buy in case unit prices fall significantly below NAV while booking profits when unit prices rise well above the NAVs.In REITs, total returns will move in line with the outlook on commercial real estate. Currently, absorption of office space is likely to outstrip the supply over the next 2-3 years which could boost returns for REITs.If you had Rs 10 lakh to invest in the market right now, how would you spread it across gold/silver, equities and debt?Asset allocation depends on risk profile, investment horizon etc. For a moderate risk-profile investor, we recommend a 50% equity allocation with 45% in debt. Gold and silver have rallied sharply in 2025 and there could be volatility in the near term. Hence, we recommend that Gold and silver should be at 5% of the portfolio but this allocation could slowly increase to as high as 10% over the next 2-3 years. For an aggressive investor, equity allocation could be at 65-70%.Lastly, what's the one contrarian idea you’d back for the next 12 months?Our preference continues to be for large cap stocks over mid/ small caps. Investors tend to agree with the hypothesis but when discussion moves to stock level ideas, investors mainly want small caps. The bias is so strong that suggesting large caps feels like a contrarian idea. Our analyst remains positive on the infrastructure and real estate sectors, which could rebound. Investors could also selectively bet on those high quality small/ mid cap ideas where valuations may have reached attractive levels.
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Luxury carmakers seek clarity on GST rates
New Delhi: A clear picture regarding new GST rates at the earliest will help the overall auto industry, including the luxury car segment, to regain momentum in the ongoing quarter, which generally sees enhanced sales on account of the festive season. The high-powered GST Council, chaired by Finance Minister Nirmala Sitharaman, will meet on September 3-4 to discuss moving to a two-slab taxation. In an interaction with PTI, BMW Group India President and CEO Hardeep Singh Brar said the recent speculation about the change in GST rates has caused uncertainty in the minds of consumers. Consumer interest and demand is strong, but they (prospective buyers) have adopted a wait-and-watch approach, and this delayed decision-making is impacting new vehicle sales at a certain level, he noted. "Expediting clarity on GST rates is essential to get back to speed and ensure the auto sector's contribution to economic growth during this quarter is robust," Brar stated. He also hoped that the sustainable push towards electric cars will continue to be encouraged as a priority and will reflect in the GST strategy by retaining the existing 5 per cent GST on all passenger electric vehicles. An adverse impact from GST rates can derail the vision of high electric adoption and local production in India, he added. Brar noted that the company is geared to introduce several model trims during the festival season. Audi India Head Balbir Singh Dhillon stated that the luxury carmaker is entering the festive season with steady momentum and a positive outlook. "Post the GST clarification expected in the first week of September, we expect consumer confidence to grow and demand to increase across our product range -- particularly for our SUVs, which continue to attract customers," he noted. With an exciting product portfolio and strong customer engagement, the automaker is confident of sustained growth throughout this festival period, Dhillon said. Mercedes-Benz India MD & CEO Santosh Iyer said the festive seasonality is highly anticipated by customers and the company will roll out an integrated campaign next week, addressing customers' aspirations. "We expect this festive season to bring in impetus and drive sales as this is the right time, owing to positive customer sentiment and a refreshing new portfolio on offer," he added. Commenting on the overall business scenario in the luxury car segment, Icra Senior Vice President & Group Head, Corporate Ratings Jitin Makkar said the sales during the festive season this year is expected to grow only in the mid-single digits, as trade headwinds emanating from the impact of high US tariffs are likely to dampen business sentiment. Between FY22 and FY25, the luxury car segment outpaced the broader passenger vehicle market, driven by strong aspirational demand across diverse demographics, including younger and first-time buyers, he added. "However, this trend is poised to reverse in FY26. A potential GST rate cut on smaller cars could stimulate demand in the mass-market segment, while the luxury segment may face a more subdued environment," Makkar said. Already, in the first half of CY2025, growth in luxury car sales has been tepid, weighed down by geopolitical tensions and stock market volatility, he said. "Although festive season buying may lift volumes sequentially, overall growth for the full year is likely to remain muted," he added. The festive season usually commences with Onam and ends with Diwali every year.
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40% of 2-wheelers to be electric by FY31
Electric two-wheeler penetration could rise to about 40 per cent by FY31 in an 'optimistic scenario' when the overall two-wheeler industry in India touch 3-3.1 crore units annually growing at 8 per cent CAGR, according to Ather Energy Ltd. The growth is expected to be driven by increased EV launches, strong government support, rapid infrastructure development, reduced battery prices, and a faster consumer shift, the company said in its annual report for 2024-25. In its management discussion and analysis, Ather Energy said the rapidly expanding EV market, propelled by legacy players increasing their EV portfolios and new entrants expanding capacity, is accelerating growth. The entry of established brands into the EV market is expected to provide significant momentum. The expansion of distribution in the E2W (electric two-wheeler) market is also expected to fuel the sector's growth, it said. "Overall, two-wheeler sales are projected to grow at 7 per cent CAGR, reaching 29-30 million units by FY31," the company said. The electric two-wheeler (E2W) market is expected to grow at 41 per cent CAGR, while the internal combustion engine (ICE) market will see a moderate growth of 2 per cent CAGR. By FY31, E2Ws are anticipated to account for 35 per cent of overall two-wheeler sales, it added. "In an optimistic scenario, driven by increased EV launches, strong government support, rapid infrastructure development, reduced battery prices, and a faster consumer shift toward electrification, industry sales could grow at 8 per cent CAGR, reaching 30-31 million units by FY31," Ather Energy said. In this scenario, the company said,"EV penetration may rise to 40 per cent, compared to the 35 per cent projected in the base case." Citing VAHAN and SIAM data, the company said,"India has established itself as one of the largest motorised two-wheeler markets in the world by volume, with domestic sales reaching 20 million units in FY25." In their message to the shareholders, Ather Energy Founders Tarun Sanjay Mehta Swapnil Babanlal Jain said electric vehicle penetration in scooters touched 16 per cent in FY25. "We anticipate this growth to continue, and scooters to power this growth. By FY31, an estimated 70- 75 per cent of scooters will be electric, and we are well-positioned to capitalise on this growth," they said. In FY25, the company said EV penetration in two-wheelers reached 5.8 per cent up from 5.1 per cent in FY24. Scooters continued to lead electrification with approximately 15.7 per cent of scooters in FY25 being electric. Scooters are expected to lead electrification in 2W. E2W penetration in scooters is expected to be as high as 70 per cent in FY31 and in motorcycles it is projected to be 10 per cent by FY31, it added. Sharing an update on its third plant at Chhatrapati Sambhajinagar (formerly Aurangabad) in Maharashtra, Ather Energy said,"The first phase of the facility, work for which has already begun, is planned to commence production in phases during FY27." It will add 5 lakh E2Ws of installed annual production capacity and upon completion of construction for both phases the company's total installed capacity, including from the Hosur Factory, is expected to reach a total of 14.2 lakh E2Ws per year.
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NSE hikes quantity freeze limit for Bank Nifty derivatives to 900 from September 1
The National Stock Exchange (NSE) has revised the quantity freeze limit for Bank Nifty derivatives contracts, increasing it from 600 to 900, effective September 1.According to the updated framework, freeze limits for other key indices—Nifty (1,800), Finnifty (1,800), Nifty Midcap Select (2,800), and Nifty Next 50 (600)—remain unchanged.NSE has advised its members to update their trading applications by loading the revised contract file before the effective date.The change was announced via a circular issued on August 29.In the Futures & Options (F&O) segment, the quantity freeze limit refers to the maximum number of contracts (lots) that can be placed in a single order.Exchanges set quantity freeze limits to ensure liquidity, promote fair play, and reduce the risk of market distortion from large, unintended trades. These limits help prevent "fat finger" errors, accidentally placed large orders that can disrupt price discovery.As per NSE’s previous circular dated June 30, 2025, the quantity freeze limit for Bank Nifty per single order was set at 600 contracts. This has now been raised to 900, effective September 1.Expiry Day Shift for DerivativesStarting this week, the expiry days for NSE and BSE indices will interchange. NSE has revised the expiry day for all index and stock derivatives contracts from Thursdays to Tuesdays. However, monthly, quarterly, and half-yearly contracts will continue to expire on the last Thursday of the respective expiry month.The Nifty and stock derivative monthly contracts expired for the last time on Thursday, August 28. Revised contract files reflecting the new expiry dates are now available on the NSE website.Market RecapIndian benchmark indices traded within a narrow range on Friday but ended in the red, weighed down by losses in Reliance Industries, HDFC Bank, and Infosys.The Nifty fell 74.05 points, or 0.3%, to close at 24,426.85, while the S&P BSE Sensex declined by 270.92 points, or 0.34%, to finish at 79,809.65.Also Read: 360 BSE 500 stocks bleed in August, 65 lose in double-digits; Maruti & KIOCL shine with up to 28% jump(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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