By Nikhil Agarwal

Copyright indiatimes

AgenciesAn investor should always deploy funds in a manner consistent with their time horizon, risk tolerance, and financial goals.

After a year of flat returns, investors are asking if it’s finally time to put spare cash to work. Aparna Shanker, CIO–Equity at The Wealth Company Mutual Fund, breaks down why GST cuts could be the game changer, which sectors look strongest, and where fresh opportunities are emerging.Edited excerpts from a chat:Given that the stock market has given near flat returns in the last one year, do you think that most of the time correction is behind us and it is now time to be overweight equities and deploy spare cash?While pockets of demanding valuations still exist, our view is that the market is largely fairly valued at the current juncture. The time correction has helped valuations at an index and sectoral level. We also continue to see opportunities for growth in select mid and small cap stocks. The benefits towards consumption-oriented companies from the GST cut should revive earnings growth for those companies.Thus, we see that a more balanced approach towards allocation makes sense at the current juncture. Extended periods of holding excess cash have been shown to drag investor returns as “time in the market” is more important for long term returns than market timing. Thus, investors should deploy cash in a manner such that they are letting cash levels exceed their ideal allocation towards equity investment.Live EventsGST is being seen as the biggest trigger for the market in 2025. Would you agree? And how would you tweak your portfolio as a result?The GST rate cut in 2025 is expected to improve consumer sentiment and growth boosting growth for listed Indian companies. With reducing to just two slabs (5% for essentials and 18% for most other items), the reform has made consumption goods, autos, durables, food, and even insurance markedly cheaper, spurring household and business demand. Many investors have compared this tax cut to other historical pro market moves such as the 2019 corporate tax cut. So far auto, FMCG, consumer durables, and cement have recorded sharp gains.Portfolios would need to adjust to this new environment with a likely higher allocation to consumption-centric sectors such as including FMCG, auto, consumer durables, retail, agri commodities, and insurance. Specific consumer facing mid and small caps are also well placed to capture value from this change in tax rates. The efforts by some auto and FMCG leaders to attempt to pass through the cuts have already happened. Thus, our portfolio would likely have a more rural and domestic consumption focus. This especially becomes crucial in the backdrop of weak global growth and tariff related disruptions to certain sectors.Auto is being seen as the biggest sectoral winner of GST reforms. How would you play the auto cycle which in itself is quite broad with tractors, ancillaries, CVs and PVs players?GST cuts are likely to result in better volumes for auto OEMs. Auto OEMs with higher ticket SKUs are likely to see the most benefit as the gross savings to customers are notable.Analysis of the impact of duty/tax reductions on sales volumes indicates that Passenger Vehicle (PV) volume growth revives by as much as ~20% CAGR for a two-year period (on average), while the boost for 2W OEMs also happens but at a slower pace. Further benefits are also expected from macro factors such as the income-tax rate cut, interest rate reduction in FY26, and the expected Pay Commission benefit in FY27. Volume growth recovery to be led by cars and 2Ws in the festive season, followed by Commercial Vehicles (CVs), in 2H FY26.IT has not only been the worst performing sector of 2025 but the outlook now looks more grim given the noise around the HIRE Bill. Is that a serious threat from a longer term perspective? How much weightage are you giving to IT in your portfolios?For sure there is a lot of uncertainty surrounding the IT sector in general as a substantial portion of their revenues come from the US market. Such policies or Acts tend to increase costs and may reduce the arbitrage of lower costs for Indian IT companies. During these transitionary times, a lot will depend upon the individual company how it addresses challenges in the form of renegotiations, contract delays, cancellations, higher costs, diversifying the client base, etc. All in all, the changing dynamics will lead to slower performance of IT stocks.We will be having the Q2 earnings numbers flowing in a month from now. Do you think the September quarter would be the last of the single-digit earnings growth and we can expect double-digit growth from Q3 onwards?We feel progressively the earning growth will improve based on the economic activity, multiple booster policies Government has been launching but it will be difficult to say that if that growth can be double digit or no. Also, gradual improvement with longer sustainability is better for the stock market performance than volatility.Within the consumption basket, how would you go about picking winning stocks?Consumer discretionary is likely to be a winner especially those sectors (Auto, RAC) who saw GST rates cut from 28% to 18%. Consumer staples are also likely to see a boost from lower prices for consumers, likely encouraging up trading ins some product segments. However, consumer staples with high penetration levels are less likely to show the sharper growth than consumer discretionary.Besides consumption and auto, which other sectors do you believe will lead the next leg of market growth, and what’s driving your conviction in them?The Indian economy still has a lot of tailwinds that should help drive growth across many sectors over the long term. Based on the current economic condition, we see financial services, power (specifically renewable energy), and infrastructure emerge as the three key sectors poised to drive India’s next growth phase.India’s financialisation of savings is accelerating rapidly, with rising interest in capital markets and insurance creating substantial opportunities. The fintech market is projected to reach $1.3 trillion by 2025, driven by digital adoption and UPI infrastructure. This sector benefits from India’s robust digital public infrastructure and growing investor participation in equity markets.The energy transition represents a massive investment opportunity as India has committed to 500 GW of non-fossil fuel capacity by 2030. Execution of utility scale RE projects related to solar & wind power, storage, green hydrogen, transmission and grid modernization, is likely to deliver sustainable 15-17% growth for the sector as a whole.Government capex allocation of ₹11.1 lakh crore for infrastructure projects is likely to drive momentum in capex related to railways, defense, power, semiconductors and data centers.If you had Rs 10 lakh to invest in the market right now, how would you spread it across gold/silver, equities and debt?An investor should always deploy funds in a manner consistent with their time horizon, risk tolerance, and financial goals. As such the investment allocation decision will always be a very personal one. A good mix according to me would be: (1) 7 lakh towards a good mix of flexicap/ multicap MF schemes (2) 2 lakh in debt (either liquid MF or FD), and 1 lakh towards gold and silver, via ETF (given the tax efficiency vs holding physical). This approach ensures strong growth exposure while cushioning volatility through stable debt allocation and hedging inflation or macro shocks via gold and silver investments, with tax efficiency favored by using ETFs over physical gold.Diversified equity funds (flexicap/multicap) can harness long-term India growth trends. Debt allocation ensures capital preservation and liquidity for emergencies, which becomes crucial amid market volatility and economic cycle shifts. Gold and silver ETFs act as insurance against currency depreciation, geopolitical stress, and rising inflation, all of which remain key risks in the current macro environment.Lastly, what’s the one contrarian idea you’d back for the next 12 months?A hammered midcap IT stock lead by a management with proven track record and having foresight to diversify client base away from US markets would be a good candidate.Add as a Reliable and Trusted News Source Add Now!
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