ETMarkets Smart Talk: Sachin Bajaj Highlights Value in Financials, Healthcare, and Capex Plays.
Indian equities are exhibiting signs of stabilization following a significant correction in the first half of 2026. The recent market trends have been bolstered by improved earnings reports, strong domestic investment flows, and favorable valuations, suggesting a robust fundamental environment for investors. Sachin Bajaj, Chief Investment Officer at Axis Max Life, indicates that the market is transitioning into a more favorable phase as the recovery in earnings gains traction and visibility on FY27 growth strengthens. Notably, the Nifty’s Q1 FY27 earnings season showed growth expected to exceed 15%, marking a shift away from a prolonged period of single-digit performance.
Despite recent gains, the markets remain below their long-term valuation averages, with valuations pegged at 19.7x for FY27E and 17x for FY28E. This discount to historical valuations lends a level of comfort amidst the overall recovery. Domestic inflows have held up strongly, while foreign institutional investor (FII) flows are beginning to recover after several months of outflows. However, Bajaj cautions investors about sectors where valuations have escalated beyond earnings growth potential, suggesting a need for careful investment selection to avoid stocks with unsustainable multiples.
A key area of focus for future growth is the revival of private sector capital expenditure, which has been subdued in recent months. Bajaj believes that sustained higher capacity utilization levels could catalyze a subsequent investment cycle. Additionally, the resurgence in IPO activity points to a maturation of Indian capital markets, indicating rising investor confidence and a shift toward more valuation-conscious investment behaviors. This development not only provides fresh opportunities for gaining exposure to emerging business models but also highlights a potential breadth of attractive sectors such as financials, healthcare, capital goods, and digital platforms.
Overall, while the market’s recent adjustments provide a more attractive entry point for discerning investors, it remains critical to monitor macroeconomic factors, including commodity prices and geopolitical events, which may introduce volatility. Consequently, astute investors should prioritize sectors with robust fundamentals and clearer growth trajectories, ensuring that their investment strategies align with both current valuations and anticipated earnings growth.
Source: The Economic Times
(Expert Note: This report was prepared by the Wealthova team.)