Expert View: Indian Stock Market Slightly Above Long-Term Valuations, Says Vivek Rajaraman of Waterfield Advisors

Expert view on markets: Vivek Rajaraman, Executive Director, Head – Client Advisory, Waterfield AdvisorsRemains Constructive on Broader Markets. He believes strong fund flows from diis and the revival of FPI Flows Can Keep the Indian Stock Market Buoyant. In an interview with mint, rajaraman shares his views on the potential impact of the US-china trade deal on India, the current narrative about definition, psu and railway sector and investment strategy for the next One to two years. Here are the edited excerpts of the interview:

Do you think the Indian Stock Market May Scale a Fresh in the Next Few Mains?

The domestic market reacted to a good results season in the last quarter, with broad market earnings going up nearly 15 per cent yoy.

Going forward, Earnings Estimates Seem Stable, and Macro Fundamentals Like GDP Growth, Steady Inflation, and Manageable Deficit Support Growth.

We need to watch out for global factors such as geopolitical tensions, tariff-Related Disrupties of Supply Chains, and Inflation.

Considering all these, markets are currently slightly over long-term valuations, bot on a price-to-earnings and price-to-book basis.

If there isn’t any disrupt, Strong Fund Flows from Diis and the revival of FPI Flows Can Keep the Markets Buoyant.

Do you think there will be an increase risk of Foreign Capital outflow from

While Capital Movement out of India and Into China may be the immediative narrative, the issue is more complex.

From China’s point of view, their economy recoverry post-asthe-asthe-asthexes and recent successes in ai have increased their appeal.

The tariff truce will also take away some of the advantage for manufacturing in India under the ‘China plus one’ strategy.

Hence, there may be a short-term increase in FPI Flows to China. However, India’s Structural Growth Trajectory Remains Intact.

Indian firms have also focused on sector Less Affected by India-China Trade Dynamics

We have Also

India’s growth and inflation dynamics look favorable. What is your expectation of the RBI’s Interest Rate Trajectory?

The RBI Governor, Sanjay Malhotra, in his speech post the Monetary Policy Committee Decision on 6th June, decisively stated the change in stance in stance from acommodative to neutral.

This cleaned signals that there will be no further rate cuts until data emerges to support them.

The Reduction in Rate Cuts Impacted The Yields of Money Market Instruments and Short-Duration Bonds More than long-term bonds, leading to a steepning of the yield curve.

However, longer-term rates increase slightly, steepning the yield curve.

While we can see some moderation in the 10-year rates, we expect this steepness of the curve to remain for the remind of the year.

What is your take on the current narrative about the defense, PSU and Railway Sector?

The longer-term vision for the defense industry in India is Ambitious. The plan priorities self-socialies and then Leadership in Key Areas Where We Can Build Capabilitys.

Of course, the current manufacturing ecosystem is dominated by the public sector, which accounted for Nearly 70 per cent of all defense production in fy25.

However, the private sector’s share has steadily increased from 14 per cent in fy17 to 21 per cent in fy25.

This has also also corresponded with a 7-8 per cent growth in the defense budget since fy20. We see this sector getting a lot of focus.

PSUS, in General, Catch the Market’s Attention from Time to Time and Participate in a broad-based raly.

We will be very selective about this segment, depending upon the attractiveness of the sector, the quality of the company, and the valuation.

What should be our investment strategy for the next one to two years?

We remain constructive on broader markets. Worries Around Reciprocal Tariffs Have Received To An Extent, and We see the focus shifting to bilateral trade trees.

Signs of a recovery in discretionary consumption demand should start to become visible as the effects of Monetary Easing Begin to take hold.

For Investors who are building equity positions, we advance a Valuation-Based Development Plan to Reach the Strategic Weight in the Portfolio in a Reasonable Timeframe.

For Fixed Income, Build a Core Portfolio Around the Three to five-Year Maturity Bucket.

We can take advantage of the new fund categories available to get better post-tax returns. Based on Risk Budgets, We Can Add to Higher-Yielding Bonds Directly or Via Funds.

Read all market-Related news here

Read more stories by Nishant kumar

Disclaimer: This story is for educational purposes only. The views and recommendations about individual analysts or broking companies, not mint. We Advise Investors to Check With Certified Experts Before Making Any Investment Decisions, As Market Conditions Can Change Rapidly, and Circumstances May Vary.