Anish Tawakley, co-CIO Equity at ICICI Prudential AMC, remains optimistic about India’s economic outlook but cautions that weak demand continues to be a hurdle. In an interview with Mint, he noted that while a broad recovery will support overall earnings, it will not lift overvalued and fundamentally weak businesses, particularly among mid- and small-cap stocks.
He said India’s macro setup is strong, with stable inflation, a manageable current account deficit, and healthy corporate and banking balance sheets. Policy support from the RBI and government further strengthens the backdrop. However, he warned that certain smaller companies with stretched valuations could still face challenges despite an improving economy.
Tawakley believes earnings growth—not short-term fund flows—will drive markets in the medium term. He added that delays in the India–US trade deal are unlikely to derail recovery since the affected sectors contribute minimally to GDP and domestic demand can offset export weakness.
For the next one to two years, he is bullish on domestic cyclical sectors such as industrials, capital goods, autos, cement, and financials, though he is cautious on unsecured lending. He also sees better value in large caps, given elevated valuations in mid- and small-cap segments.