FII Flows Return 2026: Markets Underpricing Upside – Khemani
- Carnelian Asset Management's Vikas Khemani emphasizes focusing on individual stock performance and earnings visibility amidst market consolidation.
- As Indian equities navigate a period of consolidation influenced by fluctuating global investment flows, investors are increasingly prioritizing a bottom-up approach to stock selection.
- This trend is particularly relevant given the current global economic uncertainty and the potential for volatility in broader market indices.Bottom-up investing allows fund managers to mitigate risk...
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Vikas Khemani Advocates Bottom-Up Stock Selection in Indian Equities
Table of Contents
Carnelian Asset Management’s Vikas Khemani emphasizes focusing on individual stock performance and earnings visibility amidst market consolidation.
Market Context: Consolidation and Shifting Strategies
As Indian equities navigate a period of consolidation influenced by fluctuating global investment flows, investors are increasingly prioritizing a bottom-up approach to stock selection. This strategy contrasts with broader market-cap or thematic investment approaches. The shift reflects a growing emphasis on identifying companies with strong fundamentals and lasting growth potential,rather than relying on overall market trends.
This trend is particularly relevant given the current global economic uncertainty and the potential for volatility in broader market indices.Bottom-up investing allows fund managers to mitigate risk by focusing on companies that are less susceptible to macroeconomic headwinds.
Vikas Khemani’s Perspective: PSU Banks and Growth Opportunities
In a recent interview with ET Now, Vikas Khemani, of carnelian Asset Management, shared his insights on key sectors and investment strategies. He expressed a particularly positive outlook on PSU banks, highlighting their significant conversion over the past decade.
Khemani stated, “Yes, absolutely.We have been holding PSU banks for quite some time. These are incredible franchises that have seen significant transformation in asset quality, technology and governance. They are very different from what they were 10 years ago. Even today, many of them are delivering 15-18% ROEs and growing reasonably well post consolidation, so we continue to be bullish on the pack.”
He also discussed opportunities in IT services and manufacturing, suggesting these sectors offer potential for long-term growth.
Bottom-Up vs. Top-Down: A Deeper Dive
the core of Khemani’s strategy lies in a bottom-up approach, prioritizing individual company analysis over broader market trends. He believes that while liquidity is critically important for fund managers, sustainable returns are ultimately driven by earnings visibility and reasonable valuations.
Here’s a comparison of the two approaches:
| Approach | Focus | Risk Profile | Potential Returns |
|---|---|---|---|
| Bottom-Up | Individual company fundamentals | Moderate to High (depending on stock selection) | Potentially higher,driven by specific company growth |
| Top-Down | Macroeconomic trends and sector performance | Moderate | Dependent on overall market performance |
Khemani’s willingness to hold investments through periods of short-term underperformance underscores his commitment to a long-term investment horizon. He emphasizes that a focus on sustainable earnings growth and valuation comfort is key to achieving consistent returns.