Despite tariff shocks and market volatility, Sunil Singhania of Abakkus Asset Manager remains optimistic about India's long-term growth. He advises investors to capitalize on corrections to build positions, emphasizing a bottom-up approach with patience. Singhania cautions against the IPO frenzy, urging investors to prioritize fundamentals and moderate return expectations, anticipating mid-teen returns after a period of extraordinary growth.

Use corrections to build positions at cheaper levels; don't get FOMO over IPOs: Sunil Singhania

India's Market: A Cautious Optimism Amidst Tariff Turmoil

Sunil Singhania, Founder of Abakkus Asset Manager LLP, offers a nuanced perspective on India's current market conditions, balancing concerns over recent US tariffs with long-term optimism.

While acknowledging the "choppy" market of the last few months, marked by slowing growth, earnings pressure, and foreign capital outflows, Singhania highlights the unexpected 50% tariff on Indian exports as a significant headwind. He notes, "It is very unnatural to expect India to pay 50% while countries with higher deficits face lower tariffs."

Despite this, he remains bullish on India's underlying strength:

Resilient Macroeconomic Backdrop: The government's income tax relief, potential GST cuts, and RBI liquidity injection, coupled with strong monsoons and stable inflation, paint a positive domestic picture.
Tariff Easing Probability: Singhania estimates an 80-90% chance of tariff reduction, predicting a sharp market rebound if this occurs. He believes much of the negative news is already factored into current valuations.

Investment Strategy: Singhania advises investors to seize the current correction:

Act Now, Not Later: He urges investors to start building positions, emphasizing that the market downturn presents an opportunity to acquire assets 5-15% cheaper.
Moderate Return Expectations: Following the exceptional growth of 2020-2024, investors should anticipate more modest, mid-teen returns going forward.

IPO Frenzy: Proceed with Caution

Singhania sounds a note of warning regarding the current IPO boom:

"I have never seen so many companies planning IPOs as now. Too much paper is hitting the market, with promoters offloading large stakes. Investors must not get carried away by FOMO. Fundamentals matter much more now."

He further points out the potential impact of Foreign Institutional Investor (FII) sentiment. A shift in their stance could significantly impact market flows. He notes that the lack of net dollar inflow from FIIs in five years presents a potential upside.

Singhania's core investment philosophy remains a bottom-up approach emphasizing patience and discipline. He concludes by reiterating that opportunities abound in India, but investors must remain selective and realistic in their approach.