“Maybe for the next 6 months we do not go anywhere,” Sambre said, adding that investors may need to have a longer holding period before they start seeing returns. He also expects foreign investors to remain cautious as they have alternatives in markets where growth remains stronger.
Sambre said investors, both foreign and domestic, are looking for sustainable growth, while Indian large-cap earnings have remained subdued over the past two years. “I think this is a risk-off kind of an environment,” he said, adding that the situation could change once there are visible signs of growth returning to Indian earnings.
Despite the broader market weakness, Sambre sees a clearer earnings improvement in the mid- and small-cap segments compared with large caps. He said several categories have been showing sustained outperformance, with opportunities emerging in specific parts of the market.
Manufacturing is one area where he sees opportunities, while pharmaceuticals are showing signs of a turnaround. Sambre is also becoming incrementally more positive on select chemical companies as price trends begin to improve.
IT and banking, meanwhile, have become relatively attractive from a valuation perspective. However, Sambre believes investors need to be selective, buy at reasonable valuations and wait for the broader sector cycle to turn in their favour.
On insurance, Sambre said the proposed regulations, if implemented in their current form, could be harsh, particularly for the distribution side and lenders that depend significantly on insurance commissions. Investors are still assessing the eventual impact, making the final regulations an important trigger for the sector.
He said the first level of impact has already been reflected in some stocks. In the case of PB Fintech, for instance, Sambre said the expected earnings impact has already been factored into the stock to a significant extent. He added that if the final regulations are less severe than the current draft, it could provide some upside.
Sambre also raised a broader concern about sudden regulatory changes across sectors, saying they can make it difficult for investors to build long-term business models. He said regulators could provide greater visibility on how industries would transition to a new framework.
Watch the full conversation here
“There has to be some visibility and glide path as to how the regulators broadly have been thinking,” Sambre said.
Catch all the latest updates from the stock market here