Speaking to ET Now, Baliga said the rupee is likely to remain range-bound unless crude oil prices cool significantly and foreign institutional investors return meaningfully to Indian equities.
“See, the currency would remain I suppose in this range unless, of course, your crude cools off and the FIIs start returning and that is at least some time away. So, from that point of view yes, one can be investing in pharma because that is one of those safer hiding spots especially in a scenario like this and again, there I would possibly go with the topline pharma companies as compared to the smallcap or the midcap ones,” Baliga said.
According to him, investors should focus on larger pharmaceutical companies rather than taking exposure to smaller midcap and smallcap names, especially in uncertain market conditions.
Jewellery Stocks May Face Pressure
Baliga also expressed caution on jewellery companies following recent earnings announcements and the impact of higher import duties on gold.
The rise in import duties, along with additional levies, has pushed gold prices significantly higher, potentially affecting demand and profitability across the sector. Baliga noted that jewellery companies may have to temporarily alter their business strategies, with greater reliance on recycled gold instead of fresh imports.
“Yes, and especially after PM Modi’s appeal most of them would have to change their business model at least temporarily, temporarily in the sense at least for the next one year that it will be more on the recycled gold than new gold and the way the duty also has been imposed it is going to be quite expensive. Already we have seen the gold prices going up, so because of which the volumes are also coming down to a certain extent. So, overall, if you are asking for the next two to three quarters, most of them will have margin issues and you just see the PN Gadgil’s numbers, clearly margins have fallen. So, for the time being one should stay away from most of these jewellery stocks, maybe take a fresh view in the next one or two quarters,” he said.
The comments indicate that the sector could witness pressure on both demand and operating margins in the near term.
Positive View on Tata Motors
On the automobile front, Baliga maintained a constructive stance on Tata Motors despite mixed quarterly numbers.
While the company’s domestic passenger vehicle business remained relatively stable, its luxury vehicle arm Jaguar Land Rover delivered a largely neutral performance. Baliga pointed out that JLR had faced operational issues over the last few months, but expects improvement going forward.
“That is true but again, we should remember that JLR had that issue in the last couple of months. Hopefully, going ahead that should be settled and because of which we should start seeing better numbers as far as JLR is concerned. So, at these levels I would still be a bit positive on Tata Motors,” he said.
Defence Theme Still Intact for Solar Industries
Baliga also shared a bullish long-term outlook on Solar Industries India, particularly due to its leadership position in defence products and consistent margin performance.
After initially missing the company name during the discussion, Baliga highlighted Solar Industries’ strong execution track record and healthy profitability metrics.
“Solar Industries has been a leader in that segment of defence products. So, the performance which the company has been showing I think that will continue even going ahead and consistently, if you see the margins, they have been quite high consistently all in the region of 26-28%. So, I expect the growth to continue. And if you are talking of the next four to five years, yes, we could see much better levels than where it is right now. I will not be surprised if you continue to see that 15% sort of a CAGR as far as the stock is concerned,” he said.
The remarks come at a time when defence-related stocks continue to attract investor attention amid strong order pipelines and increased government focus on domestic manufacturing.
