Gautam Trivedi, representing Nepean Capital, expressed relief at the recent market correction, describing it as intense but ultimately beneficial in restoring a sense of stability. He acknowledged that while the market rebound over the past three days has been positive, its longevity remains uncertain.
Trivedi noted that a significant market correction was anticipated for 6 to 12 months, and when it finally occurred, it induced a degree of panic. He emphasized that the current scenario reflects a cyclical slowdown rather than a structural issue. Investors are reevaluating earnings estimates, leading to some downgrades, and certain sectors, such as quick-service restaurants and building materials, continue to struggle with sales growth.
Looking ahead, Trivedi highlighted the importance of monitoring potential reciprocal tariffs the United States might impose globally, including on India, expected to be unveiled on April 2nd.
Discussing market valuations, Trivedi revealed that a recent analysis of the top 1,200 stocks showed approximately 892 of them had experienced a correction of 25% or more, with 125 stocks corrected by 50% or more. However, he cautioned that a significant decrease doesn’t necessarily signal a buying opportunity. He remains optimistic about the power, travel, tourism, and real estate sectors, noting their significant growth potential and improved valuations.
Regarding the Indian IT industry, Trivedi acknowledged growing concerns over artificial intelligence potentially impacting lower-tier jobs. While he noted positive developments, such as McDonald’s announcement to establish a global capability center in Hyderabad, he remains cautious about the sector’s future until AI’s full impact becomes clear. He expressed that the sector’s present correction hasn’t changed this outlook, though AI-focused firms might benefit.
Trivedi also elaborated on the attractiveness of the power sector, which he views as a structural growth story. He highlighted the ongoing demand for energy driven by increased transmission and distribution needs, government privatization initiatives, and the expansion of smart meter businesses. The rising use of AI and data centers are expected to further fuel power demand over the next two decades. Trivedi concluded by emphasizing the exponential growth in data creation and the need for localized data centers in India, which will significantly increase power demand.
