Optimism returns to Indian equity markets amid signs of earnings growth, easing geopolitical tensions, and increasing foreign institutional flows, according to Abakkus Asset Managers’ Bihari Lal Deora.
Improving corporate earnings, calmer geopolitical tensions and a return of foreign buying are giving Indian equity investors fresh reasons to be optimistic after a muted stretch of returns, according to Bihari Lal Deora, director at Abakkus Asset Managers. Speaking to Zee Business managing editor Anil Singhvi, Deora said profit growth is widening across large-, mid- and small-cap companies, suggesting that a more durable earnings recovery may be under way.
He said roughly 398 Nifty 500 companies had reported results by last Friday, with adjusted net profit rising about 14% year on year and reported profit after tax up about 11%. More encouraging, in his view, is that around 55% to 60% of those firms posted adjusted profit growth of more than 15%, which he described as a sign that earnings upgrades are beginning to filter through the market.
Deora attributed the resilience to companies coping with cost pressure through selective price increases, tighter spending and operating leverage. He also pointed to healthy demand in financial services, infrastructure, consumer businesses and automobiles. That backdrop has helped Indian shares edge higher, with the Sensex and Nifty both advancing over the past month and trading not far from their recent highs.
Crude oil remains a watchpoint for India, which relies heavily on imports, but Deora said the economy’s oil intensity has fallen sharply over the past 15 to 20 years because of ethanol blending, solar power and electrification. Even with oil prices near $80 a barrel amid tensions over the Strait of Hormuz, he said markets have not reacted as sharply as they might have in the past. He also said foreign institutional investors appear to be returning, after heavy selling through much of the past year, with July flows already positive by roughly $2bn to $3bn.
For investors chasing the next leg of market gains, Deora argued that fundamentals matter more than market capitalisation. He outlined Abakkus’s “15-15” approach, which targets businesses that can grow earnings by about 15% a year, deliver strong returns and still trade at sensible valuations. That philosophy fits the wider investment approach of Abakkus Asset Managers, founded by Sunil Singhania in 2018 and now managing about ₹41,483 crore, according to the firm’s website.
Within that framework, Deora highlighted three preferred areas: financial services, healthcare and capital goods. In financials, he said the opportunity extends beyond banks and non-bank lenders to asset managers, life insurers, wealth managers and brokers, with India’s low mutual fund penetration and modest insurance coverage leaving room for growth. Healthcare remains attractive because of domestic demand, exports, and India’s role in contract development, manufacturing and active pharmaceutical ingredients. Capital goods, he said, also stands out as an area that can benefit from investment-led growth.
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