There will be polarisation in earnings, market returns: Ambit Asset CEO

Over the next year or two, earnings growth will be limited to a few sectors and not broad-based, said Sushant Bhansali, chief executive officer at Ambit Asset Management

While India lagged global markets in calendar year 2025 (CY25), the market is expected to recover lost ground through the rest of 2025, says SUSHANT BHANSALI, chief executive officer at Ambit Asset Management in an email interview with Sirali Gupta. Edited excerpts:

 

Do you believe that events like monetary policy easing and the anticipated consumption boost have already been priced in by the markets?

Monetary policy easing and anticipated consumption boosts have likely been partially priced into markets, but opportunities remain in select pockets. March 2025 quarter (Q4-FY25) results are mostly announced along with management commentary for the coming quarters and years. Investors should focus on companies and sectors where earnings growth is more visible than others as the underlying economic environment is relatively tough compared to the last few years and we will witness a polarisation of earnings as well as market returns.

 

Given the current macroeconomic backdrop, what is your investment strategy for the next 6–12 months?

Over the next year or two, earnings growth will be limited to a few sectors and not broad-based. Our belief is that discretionary consumption, financials, and import substitution offer better prospects in the current environment.

 

How do you assess current market valuations across large-caps, midcaps, and smallcaps? Are there any pockets of concern or opportunity?

Large-cap continues to remain in line with long-term averages, while mid-cap, and small caps are at marginal premium to 5-year averages. That said, balance sheets are significantly less leveraged compared to previous cycles thus these premiums might be sustained. Investors need to be watchful of narratives as numbers will take precedence and offer better risk-adjusted returns. Given the not-so-strong economic environment, good and clean companies are relatively better bets in the current context.  FOLLOW STOCK MARKET LIVE UPDATES TODAY 

 

What is your outlook on corporate earnings for fiscal 2025-26 (FY26)?

FY26 earnings growth for Nifty is currently expected to be in low double digits on a weak base of 6 per cent growth in FY25. Potential headwinds could be higher than anticipated amongst tariffs, weak monsoon and impact on rural economy.

 

Where do you see India positioned among its global peers in terms of market performance?

While India lagged global markets in CY25, expect the market to recover lost ground through the rest of 2025, supported by improving fundamentals, a likely consumption recovery, and stabilising inflation alongside the impact of various trade agreements India is entering into.

 

How are the bond yields likely to play out in the weeks ahead?

The US 10-year Treasury yields are expected to remain elevated in a range of 4 per cent to 5 per cent through the remainder of 2025, reflecting persistent fiscal deficit concerns, large Treasury supply, and uncertainty around the pace of Federal Reserve rate cuts. However, structural factors—such as the $9 trillion "maturity wall" of US government debt and ongoing fiscal deficits—are likely to keep yields structurally higher.

 

Globally, assets are moving from the US to emerging markets (EMs) as the dollar weakens, and yield remains elevated. Fund flows to Indian equities remain a function of growth, stability, and limited alternatives in EM.

 

How is the AMC business coming along?

Over the last few years, the market tailwinds were quite strong for AMC business offering superlative growth to the industry. As market returns become less attractive the volume growth will come down, resulting in increased competitive intensity.

 

Many new players are entering the industry and that will lead to a supply-side imbalance in talent thereby creating margin pressure. The silver lining is automation and digital distribution leading to cost efficiency. Market participants who are able to negate the impact will in the long term improve their margins.