Market Falls on Fear, Not Facts: Bajaj Finserv AMC CIO Bullish on India
Overview
Indian equities saw a sharp weekly decline, losing over ₹15 lakh crore amid geopolitical fears. Bajaj Finserv AMC's Nimesh Chandan argues the sell-off stems from sentiment, not fundamentals. He highlights strong economic indicators and sees potential for a sentiment-driven re-rating, especially with prospects of an India-Europe trade deal.
Stocks Mentioned
Indian equities snapped a two-week winning streak. They logged their sharpest weekly decline in four months amid rising geopolitical tension. BSE-listed companies saw investor wealth erode by over ₹15 lakh crore during the week. The Nifty index slipped 2.5%, while broader indices fell as much as 6%, reflecting a sharp deterioration in market sentiment.
Bajaj Finserv AMC Chief Investment Officer Nimesh Chandan asserted that the market's sharp correction is driven by sentiment, not a fundamental economic downturn. He told CNBC-TV18 that 2025 has been a turbulent year, yet the Nifty has still gained approximately 10%, with aggregate mid- and small-cap performance largely intact.
Economic Strengths Amidst Uncertainty
Chandan emphasized that India's economic cycle is robust, exceeding levels seen at the September 2024 peak. He cited improving business and profit cycles, favorable credit conditions, lower interest rates, and ample system liquidity as foundational strengths. The sole missing element, he noted, is positive market sentiment.
He explained that investors are reducing valuation multiples due to pervasive uncertainty, even as earnings estimates remain stable. This disconnect, Chandan believes, explains the market's amplified reactions to negative news.
Trade Deal Impact Overstated
Regarding the delayed India-US trade deal, Chandan suggested market concerns are exaggerated. He estimates trade disruptions with the U.S. affect only 0.3% to 0.5% of India's GDP and less than 2% of corporate profits. Tariffs can increase domestic inflation and negatively impact consumers, limiting the duration of prolonged trade disputes.
Europe Deal as a Catalyst
A potential India-Europe trade agreement represents a significant, overlooked opportunity, Chandan noted. Such a deal could powerfully shift sentiment during a period of excessive pessimism.
He posited that a turnaround in sentiment, fueled by trade developments or policy signals, could spur a sharp market rally without necessitating earnings upgrades. A return of confidence and stronger capital inflows could lead to a re-rating of the Nifty.
Sector Preferences
Bajaj Finserv AMC remains optimistic about the telecom sector due to industry consolidation, potential for tariff hikes, and rising average revenue per user. The firm holds positions in two major telecom operators and related tower businesses, offering sector exposure without direct balance sheet risk.
Vodafone Idea's situation, Chandan commented, has seen market expectations for AGR relief possibly outweighing actual outcomes.
He anticipates a steady December quarter earnings season with few negative surprises. Management guidance for FY27, particularly for auto and consumption sectors, will be crucial, with growth expectations ranging from 14% to 17%.
The IT sector remains a point of caution. While large-cap IT valuations appear attractive, weak growth visibility persists due to global uncertainty. Bajaj Finserv AMC is underweight large-cap IT but selectively invests in mid-cap firms showing consistent growth.
Chandan concluded that the market is currently in a sentiment-led phase, overshadowing fundamentals. Clarity on trade and policy, coupled with reduced market noise, could rapidly alter the narrative, potentially driving a re-rating rather than an earnings-driven ascent.
