India is well-placed to outpace other EMs: Amar Ambani, YES Securities

Just as domestic investors aren't married to one stock forever, foreign investors too assess all markets and make tactical shifts, says Ambani

Corporate earnings in India appear to be at the tail end of a soft patch, said Amar Ambani, executive director, YES Securities. In an email interview with Sirali Gupta, he also unveiled the investment strategy for Samvat 2082. Edited excerpts:

How do you view the current valuations, and what strategy would you suggest?

After a 12-month correction, Indian equity valuations are now more reasonable, with the slight P/E premium partly due to new, unprofitable listings. We expect Q2 to end with earnings downgrades, leading to improved momentum. The bull market remains intact, with equities consolidating before a projected 12–14 per cent broad market return over the next 12 months, driven by bottom-up stock selection.

 

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For a long-term investor, what’s the smartest way to diversify without diluting returns?

Equities have led returns for years, with gold catching up in the past 4–5 years and outperforming the Nifty in 2025. Equities should remain the core growth engine. Within equities, diversify by combining quality with theme-based allocation: use structural themes for active bets, and mid-cap or thematic index funds for passive exposure without over-concentration. Add selective gold and high-quality debt to protect capital and reduce volatility, without meaningfully diluting long-term returns.

With gold prices at record highs, is buying it this Diwali a smart move for portfolio safety?

Gold's bull run shows no signs of ending. Ongoing global uncertainty and trade tensions, despite ceasefire talks, bolster its safe-haven appeal. Central banks have been steadily adding to their reserves, with China leading the buying spree. With a softening dollar and likely Fed rate cuts, gold should continue to shine. We are also bullish on silver, which is catching up, and see potential for platinum gains. The main caveat: rupee appreciation could temper gold's INR-driven returns.

What are three themes that you would choose to chase and to fade for the new Samvat year?

For Samvat 2082, I’m constructive on:

• Value retailers: affordable offerings with tight cost control for niche customers.
• Electronics manufacturing services (EMS): beneficiaries of import substitution and rising domestic demand.
• Contract development and manufacturing (CDMOs): strong growth as global pharma diversifies from China.

Headwinds to watch:

• Real estate and solar module makers: pricing pressure and intensified competition.
• Ports: volatility from global trade uncertainties.

What is your earnings growth outlook for India over the next 12 months?

India’s earnings seem near the end of a soft patch. After a muted FY25 and a subdued Q2FY26, we expect momentum to rebuild from H2 FY26. While consensus pegs FY26 Nifty earnings as flat, we see scope for an upside surprise, as demand normalises and margins expand. For FY27, we expect 15 per cent earnings growth, aided by a low base and recovering consumption. GST and income-tax rationalisation, plus likely RBI rate cuts, should boost disposable incomes and discretionary demand.

Would you add or cut exposure in mid- and small-cap in the current market?

In the Indian stock market, significant alpha can still be generated via smart stock-picking in mid and small-caps. Despite lacklustre broader indices over the past year, many quality mid and small-cap names delivered impressive returns, a trend we expect to continue.

What’s your view on the pipeline of big-ticket IPOs and their impact on liquidity and valuations?

India’s primary market has turned vibrant again, with nearly $5 billion of IPOs lined up. Strong domestic liquidity—driven by mutual fund and insurance inflows—is a key tailwind. This IPO resurgence expands participation, helps check secondary-market valuations by absorbing liquidity, and gives domestic institutions efficient avenues to deploy capital into quality new opportunities.

If there’s an AI bubble forming in the US, what are the implications for Indian markets and IT earnings?

Investor enthusiasm for US AI may have outpaced near-term productivity gains, but it’s unclear if this is a full bubble. Valuations and funding are high but not extreme, while over a third of recent US gross domestic product (GDP) growth ties to data centre build-outs; AI revenues lag given heavy capex. If the bubble bursts, Indian IT services could benefit as budgets shift from AI experiments to traditional outsourcing. The impact on Indian equities is uncertain—they could mirror US weakness or decouple and keep performing, as in 2004–07.

Are foreign investors on the cusp of a structural comeback, or is this just hot money in smarter clothes?

Just as domestic investors aren’t married to one stock forever, foreign investors too assess all markets and make tactical shifts. Strong US equities, emerging China opportunities, a weakening rupee, and muted earnings prompted FII selling in India, particularly in IT services facing headwinds. However, this is likely a temporary pullback; FIIs should return once the rupee stabilises and domestic consumption strengthens.

What must India do to keep outpacing other emerging markets?

India is well placed to outpace other emerging markets, underpinned by superior growth and a stronger Return on Equity (RoE) profile. To sustain and build on this momentum, India should focus on three priorities: boosting export competitiveness through Production-Linked Incentive (PLI) schemes, trade facilitation and proactive Free Trade Agreements (FTAs); accelerating the development of new-age industries—semiconductors, data centres, AI-led technologies, rare earths, electronics, EV components, batteries and solar manufacturing—to deepen integration into global value chains; and maintaining regulatory stability to ensure policy predictability and consistency, which will keep foreign investor confidence high and reinforce India’s position as the standout EM story.