When asked about the overall market setup, Ramanathan acknowledged that valuations remain elevated but stressed that selective value is beginning to surface. “What we expect is that the market valuations are fairly rich even now. There are pockets of value emerging in the BFSI space, some of the utilities, some of the metal names as well… value is emerging gradually in some pockets and the growth is also picking up in the economy,” he said, adding that corporate profits look supportive for market momentum going forward.
On whether the market has undergone enough time correction, Ramanathan indicated that more consolidation may be healthy. “Yes, given where valuations are either a market correction or a sideways movement would make it a little more reasonable for investors to look at,” he noted.
From a tactical sectoral standpoint over the next six to twelve months, he believes largecaps remain a safer allocation, especially as their relative valuations appear appealing. He added, “Largecaps present a better allocation strategy… also having an exposure to some of the BFSI, telecom, utilities, and even pharma and IT are coming into the reasonably valued zones.”
Utilities, a sector that has already delivered sharp gains in recent years, also came up for discussion. Ramanathan suggested that the real story lies in segments supporting the energy transition rather than conventional power names. “Some of the alternate utilities, green energy, these are areas where we are a little more positive… companies in the cap good space which supply to utilities to build up their capex and some of the green energy space as well,” he explained.
Interestingly, he offered a cautious stance on the ability to directly “play” themes such as GST or consumer demand, even though these narratives have dominated discussions. “What we see is that yes, it has given a shot in the arm for the markets and sales have also picked up but we needed to sustain… stock prices have moved ahead of expectations,” he said. Still, he expects consumption to improve as lower taxes, the upcoming 8th Pay Commission and benign inflation strengthen household finances.On IT, Ramanathan made a clear distinction between large and mid-tier companies. “We cannot use a simple brush and the single brush for all IT… the largecap IT names are finding it a little more difficult to grow as compared to some of the smaller companies… the preference would be towards those companies or companies that have an active AI component,” he explained, emphasising that the broader index does not accurately reflect underlying divergences.Finally, addressing whether he is sitting on cash in anticipation of volatility, he was unequivocal: “No, we do not take cash calls.”
Ramanathan’s perspective reflects a broader sentiment in the market today—valuations remain elevated, but opportunities are slowly reappearing for those willing to be selective. The next few months, he suggests, may well be more about strategy and patience than chasing momentum.
