Market rally fundamentally justified and not a bubble: Hemant Majethia

Market outlook: Several factors have been driving the sustained strength in the markets - supportive policies, significant infrastructure investments, and overall economic growth

Given the current market/economic conditions and historical trends, HEMANT MAJETHIA, chief executive officer and founder of Ventura Securities expects a reasonable appreciation of around 8 – 10 per cent over the next 6-12 months in the frontline indices. Young investors, he said in an email interview with Sirali Gupta, should stay disciplined and think long-term. Edited excerpts:

With certain segments of the market trading at elevated valuations, do you see signs of overheating or irrational exuberance?

Several factors have been driving the sustained strength in the markets - supportive policies, significant infrastructure investments, and overall economic growth. Rising income and disposable income levels have led to increased consumption as well as greater market participation, particularly in mid-and-small cap segments. We have seen stocks move from smallcap to midcap and mid-to large-cap, indicating real growth rather than mere speculation. While some pockets appear stretched, I see growth (market rally) as fundamentally justified, largely, suggesting optimism at a broader level rather than a bubble.

What approach do you follow in the current overvalued market, especially the mid-and-small cap segment?

I always emphasise a stock-specific approach to analysis; a blanketing approach can be misleading. Although some mid-and-small cap stocks might be overvalued, many others have robust fundamentals and clear growth trajectories. It's important to carefully evaluate individual stocks based on their business models, market potential, and earnings outlook.

What is your 6- 12 month outlook for Indian equities?

Given the current market/economic conditions and historical trends, I expect a reasonable appreciation of around 8-10 per cent over the next 6-12 months. However, this outlook depends significantly on geopolitical stability and ongoing economic reforms, which could influence market dynamics.

Given rising global uncertainties, do commodities like gold and silver offer meaningful hedging opportunities for investors at this stage?

Historically, gold and silver have always served as reliable safe-haven assets during uncertain times, often appreciating significantly during geopolitical tensions or economic stress. Since the beginning of the year, gold prices have risen around 25 per cent, driven by global and domestic uncertainties.

 

While there might be scope for further appreciation, it’s difficult to say how much because it is sentiment-driven. So, while investors should make these commodities a part of their overall portfolio, it should be based on their risk tolerance rather than in expectation of immediate gains; the benefits will unfold over the long term.

What would be your recommended asset allocation strategy for young investors?

Young investors with stable income and a long investment horizon, should prioritise equities and equity-based mutual funds. Historically, equities have delivered returns of around 12 per cent. Additionally, equities offer tax advantages that further enhance long-term returns. My advice is straightforward: invest regularly, stay disciplined, and think long-term to fully benefit from compounding.

How is Ventura Securities performing in terms of revenue growth, margins, and client acquisition in the current market cycle?

Ventura Securities has seen a record performance in the recent past in terms of top-line growth. The bottom line has grown too, despite large investments in technology and people who can drive the next phase of growth.

 

We have revamped and re-launched our product and are intensely exploring incorporating a lot of artificial intelligence (AI) elements into our offerings through ongoing research and development (R&D). The long-term benefits of all these efforts will be seen over time.

Is there any plan on the horizon for Ventura to go public?

Raising capital is definitely on the cards for us and once we are clear about the route and modalities we will be in a better position to share the details.