Market Weekly Wrap: Biggest Moves, Key Trends & What To Expect Next Week | Editors' Roundtable

Ajouté : 2026-05-31

[00:00:11]A sharp sell-off on Friday dragged the markets [music] lower, leaving the benchmark indices in the red for the week. The Sensex and the Nifty both ended with losses [music] of nearly 1%.

[00:00:21]However, the broader markets continue to show some resilience. The mid caps [music] outperform the benchmark, while the Nifty Bank too managed to close with some gains. Over the next 30 minutes on Editor's Roundtable, we will decode all the action, the key triggers [music] driving markets, and what investors should watch out for in the coming week.

[00:00:39]Hello and welcome to Editor's Roundtable. I am Rima Tendulkar. With me are my colleagues Prashant, Nigel, and Nimisha. Here with us in the studio is Ravi Dharamshi, CIO Valuequest Investment Advisers.

[00:00:50]Uh, hi guys. Very tough Friday, particularly the last 30 minutes. And today is yesterday mark three week three months since the conflict started.

[00:00:59]>> nobody thought it'll go it'll go on for three months, right? So, that's the way that's the nature of the market. So, but I I guess markets have been quite resilient, right? I mean, initial hiccups, but seems like we're back to normal. We'll started ignoring the uh, the war sort of news as well. Ravi, what's your call on the market now?

[00:01:15]>> No, I think uh, you're right. See, once market gets a sense of if you can quantify what is the risk, what market tends to react to is what is unknown and unknowable. If you don't know how long this conflict will last, the bombardment continues, the crude goes up 120 130, you don't know where to put a cap on things, and you can't quantify the risk. That is where the problem lies. But now some market has come to terms that, you know, worst in terms of hostilities is over. The red line for US might be here, and Iran might be here, and it might take some time to bridge that gap. But at least we are not going back to that kind of hostilities. And also, at both of them want the Strait of Hormuz to open up.

[00:01:58]And it also there is a invisible line essentially the midterm elections for US where he basically needs to you know the president needs to show a win. And for that he has to ensure that this conflict ends because the longer it drags it's negative for him also. And the bond yields have also started reaching the point from where he starts listening to it. So I do believe that the conflict unless we see a new spike in the crude which takes it to beyond 120 130 dollars, I think we are for the moment done with this whole thing.

[00:02:32]>> Otherwise you're constructive Ravi.

[00:02:34]Uh >> So you know what it is a very very bipolar market. There is a if you see the index you feel you're not going anywhere. On bears feel it is not crashing in the way it should for the kind of crisis we have. The bulls feel it's not rising the way it should because we are in the cyclical recovery. You look at the credit growth. You look at the you know monthly sales number. The quarterly results were not bad. So everything economic wise we are on the cusp of a cyclical recovery. But because of the global uncertainty we are kind of capped. So indices the headline indices are not headed anywhere. But there is clearly a segment in the market where there's a bull market going on. And it is a stealth bull market because it is not coming on the radar. And we might categorize it as midcap. But even within that midcap the specifically where the bull market is going on are the industrials the manufacturing related stocks. And it is not only in India. It is happening worldwide. In fact I do believe that we are in a global industrial you know super cycle in terms of capex.

[00:03:36]>> Actually the list is long. I mean actually about 10 names right? There's an absolute bull market all time highs.

[00:03:42]There's GE and Hitachi and CG power is back to all time high. Siemens there's ABB there's Cummins India which has seen massive moves.

[00:03:52]The cables and wires perhaps I mean they've not really they're not started >> No, they have. Even they are at a new all-time high.

[00:04:00]>> So, this is the pack that you're referring to, right? Or or is it >> Yes. So, this is okay. Let me just take a step back step step back and paint the whole picture to you. This is a but one segment. So, you know, since 1992 maybe till late you know, early 2020 the world was running on a principle of building cost-efficient supply chain.

[00:04:24]Essentially, the world was flattening.

[00:04:26]There was globalization happening.

[00:04:28]Suddenly, in the last four five years, things have happened which have kind of turned it on its head. We are no more focused on cost and efficiencies. We are focused on resilience, redundancy, on safety, security, those kind of things.

[00:04:41]First, it was you know, COVID, which kind of made us realize that supply chains are vulnerable. Then there was a semiconductor shortage that panned out.

[00:04:50]Then we saw Russia-Ukraine war broke out which led to energy prices going through the roof in Europe.

[00:04:56]And then of course there was a tariff war trade war which made us realize that if you are too dependent on particular country for your needs, then you they can possibly weaponize it and use it against you. So, there is a trend towards building this global global supply chain resilience, energy security and independence, your own nation's sovereignty and security, and become part of the crucial technologies that are coming up and you become part of that supply chain also.

[00:05:27]And this is what is driving the global capex super cycle. And that I believe is the whole world is I mean why is Taiwan, Korea, why are they doing so well? In fact, if you over there also if you see if you strip out Samsung and if you strip out SK Hynix and the likes of it, you You see that the rest of the market is going down. The foreigners are actually exiting in those countries also in the other side of the market. Similarly, it is happening in India also. There is a pocket which is actually doing very well and there is a other market which is nobody is interested in.

[00:06:00]So, and all this money is essentially drawing more towards US because US is where the bulk of the action is happening in terms of you know the technology companies are out of there and the hyperscalers are driving this entire capex super cycle.

[00:06:16]So, I do believe there are two different sides to the market. If you are looking at indices, you will feel there's nothing in the market and if you are looking at this pocket, you feel the valuations are going berserk.

[00:06:26]>> But Ravi, because all the capital is chasing such few names. The industrials that you're talking about, stocks have doubled, valuations are 50-70 times. Can you make a bullish argument from here on for these stocks that you were referring to?

[00:06:40]>> So, you no doubt about it that the valuations have become expensive and no doubt about it that market has recognized. It is not an unknown theme anymore.

[00:06:50]However, I think where market might be underestimating is the length of the cycle, the kind of value and the you know the opportunity size and how it this value can accrue to few players.

[00:07:03]So, you see in you know this is a kind of you know opportunity where on every sector I look at, you know let's take the example of transformer. There are only handful of companies that can actually manufacture those high-end transformers which is the need of the hour. If you're going to electrify, if you're going to move towards AI data centers, you need those transformers.

[00:07:26]Whether it is medium voltage, high voltage, HVDC, there are only two-three players. And when that kind of a huge opportunity meets an monopoly or an oligopoly kind of an industry structure, the valuation tends to go crazy. And it has been so the case for the last 1 year or so, but I don't think we are at the end of the cycle. You have to focus on the cycle rather than the valuation. If you keep valuation as the decision point for entry or exit, then you will likely miss out on the cycle.

[00:07:56]>> Even if you buy right now, a transformer, you know, one or two transformer companies, you will make money comfortably.

[00:08:02]>> I will never say you should buy at this valuation, but at the same time the cycle is not ending.

[00:08:08]See, the 9 lakh crore capex cycle in India itself is still ahead of us.

[00:08:14]Also, the entire data center capex built out is ahead of us. I think by 2032, I think almost 150 GW of data centers will be built. Now, if you were to just Now, when when will those risk come about is the if this uh uh everybody has So, I think all hyperscalers combined have a free cash Not free cash flow, sorry. Operating cash flow of about 300 to 350 billion dollars. And their capex this year is going to be 700 billion dollars. So, already they're going to start leveraging their balance sheet to fund this capex. This number from 700 billion dollars goes to trillion dollars the next year, and it sustains for a 4-5 year period. Now, at some point of time, if they don't start seeing the return on their investment, and their balance sheets are leveraged, and the interest rates go through the roof, that is when the bubble >> bubble >> uh boom current boom will become a bubble, and it will start busting. Is Are we at that point? I don't think we are at that point at this point in time, and a lot of the capex still needs to happen. The balance sheets will still probably get even more leveraged from here before we start seeing the problem. But yeah, I mean, that is a discussion probably for a later date, not today.

[00:09:21]>> Okay, Ravi, let's talk about another theme then that you all have liked, the renewables theme. You know, uh I mean, it's public knowledge in terms of the companies you'll have, but at one point of time you all were the so-called lone warriors out there, because the street was doubting. You know, there is module production, maybe there is excess. Then they were going to forward integration. There was cell production, but maybe there there is excess. You know, how are you feeling about these renewable themes with regard to the listed players here in India because suddenly there's a resurgence out there?

[00:09:46]>> Yeah, so Nigel, I'm going to take a step back and again explain that first of all, in this larger global industrial capex theme, energy security and energy dependence is the larger theme. Within that, energy transition. So, we are not only trying to become energy secure, we are also trying to move away from fossil fuel towards renewables. And in this renewables also, solar is but one part of it. There are many other things to it as well. Hydrogen, nuclear, wind, battery.

[00:10:16]So, many other technologies will also come. It's not like solar is the only one, but solar definitely is the largest because it is the cheapest form of energy that humans have created at mass.

[00:10:27]So, it will have the largest adoption.

[00:10:29]The size is huge, but the problem for this is that when we start when this whole revolution started in India, we were completely dependent on China.

[00:10:39]Today you take the same case for batteries, we are completely dependent on China. In fact, the entire world is dependent on China, not only us. So, now one has to understand the strategic intent of the government. If you are trying to become energy secure and you're trying to become energy independent, then you are not going to start thinking that, you know, if I buy this from China, then it will be cheaper cheaper.

[00:11:01]So, I I should rather import from China and do this. But if you do this, you are actually giving away the leverage that you have and you are in fact going to become dependent on a rival nation for your supply chain and that can be weaponized at some point of time. So, you want to avoid that situation. So, government, what it is doing is it is keeping the profit pools protected. So, they started with providing, you know, ALMM to ALMM 1, which is essentially only the local guys can sell modules.

[00:11:29]Then they give added incentives of PLI. They also added customs duty to make the imports expensive. Now, that was the beginning at the module end. But, if you go through now they are ALMM 2 comes into effect. In fact, from 1st June onwards. Now, what that will essentially do is move the profit pools from only a standalone module guy to somebody who's integrated with a cell plus module. Then, from June 28th onwards, this will move to wafers. So, essentially government is saying, "Make your money in that window of opportunity when I'm giving you protection. Use that cash flow, backward integrate." All the way they will go till polysilicon. So, that is the way that is the pathway that government has adopted in ensuring that we have a supply chain. See, the an entrepreneur will not put money unless he has some kind of guarantee that they will make money.

[00:12:19]We are not the kind of state like China is where you don't have to consider the ROIs or you don't have to worry about the land or many other things. So, our entrepreneurs have to think about making money. Now, if they are given a window of opportunity to make that money and they use that to backward integrate, I think that's the right way to go about doing this.

[00:12:39]>> There are there are I must say there are still there are Nigel put it that they were the lone warriors. It's worked out beautifully, but there are still those who are >> Naysayers.

[00:12:47]>> on the sidelines, institutions especially, on on this theme. And the worry we hear it often enough on with analysts etc. also that maybe overcapacity is the is the is the >> Returns.

[00:12:57]>> You know, in 2 years time. And I got a call today on and maybe I should put this to the management and you're not you're you're you're a shareholder. As regards to Wari, there was a I think it was a news item that they're raising 7,000 crores.

[00:13:07]>> 10,000 crores by >> And already called me and said, "Well, you know, you should ask why are they raising equity? They're not they're not highly levered. They can raise they can raise debt. Why do equity?"

[00:13:16]>> So, I think >> Uh, so I as I said, I should >> No, it's not a question for me, but as I understand and I'll just answer it not only for this company, any company. I think the capex is 4x 5x larger than the equity raised that they are doing. So, equity will still be only 20-30% of the total fund that will be required. It's a 30-40,000 crore kind of a capex plan that they have. So, I mean, but they are first raising the equity and the debt will come in later.

[00:13:39][clears throat] >> They have some ambitious plans that they laid out in the analyst meet, at least Varry, uh, earlier on last month. Uh, you know, Ravi, stay on. We need to slip into a very short break. We'll come back and continue this fascinating conversation on Editor's Roundtable with Ravi.

[00:14:06]>> Welcome back. You're with us here on Editor's Roundtable. Uh, you know, one of the things and we've discussed a lot of stuff with Ravi in terms of what he likes, his bets, etc. Uh, but now this is not a bet, but this is a wish list that many have, especially the equity folk. I mean, all of us that, uh, equity's taxation perhaps should be reduced. I mean, this is, of course, been a constant demand since the time it was introduced back in 2008. Uh, but I guess it's gained more momentum, uh, with what has been happening on capital, with capital outflows, etc. So, we had, uh, you know, Bank of America's Amish Shah earlier today and we put that same question to him. So, just, uh, we want to play that sound bite out and then we'll ask Ravi how he thinks about this question.

[00:14:47]>> Has taxation lopsided allocations of retail, uh, savings towards equities completely yes. Has it has the capital gains discouraged foreign investors, especially when rupee is hurting, especially when, you know, earnings growth is low, valuations for India are high? So, therefore, is India, uh, out of my radar as a foreign investor? The answer is yes. Uh, and then given that large part of the rupee problem right now is also lack of capital flows, uh, I think it makes sense for us to do it. So, the answer that I'm trying to give is that, you know, logically if you think about it, we must do it.

[00:15:25]>> Ravi, your thoughts. Amish says we must do it. Logically thinking, we must do it. Your thoughts?

[00:15:30]>> So, you know what?

[00:15:32]Uh if this uh crisis has revealed, it is our vulnerability. And vulnerability is not only on the energy security and supply chain security, it is also on the fact that we are dependent on uh you know, our foreign currency. Uh and we have been kind of caught up in a uh downward spiral over there. FIAs are exiting, rupee is depreciating, uh balance of payments is going for a toss, current account deficit, fiscal deficit, both are ballooning up. And if we want to get out of this uh vicious cycle, then there is only one external injection that can help is which is essentially uh attracting foreign capital flows. So, in terms of what is the need of the hour is very, very clear. We need to attract capital. Now, government can adopt any playbook they want, but essentially we need to attract $100 billion next year. That will stabilize the rupee. That will make uh our macros fall in place again, and we'll become an attractive destination again. Will they cut LTCG to attract FPI flows? I seriously doubt that. I do believe that they are uh government is making a distinction between long-term attracting long-term sticky money, and FPI flows are considered as hot money.

[00:16:44]And that is definitely not uh a priority for this government as I understand.

[00:16:48]Now, uh I could be completely wrong, and I'll be very pleasantly surprised if it was to happen. But, I think uh I will be more uh uh you know, probably uh hoping that something on the bond market side, something on the uh if attracting FDI in some of the largest sectors, like probably what like what they have done for data centers, where they have given a 20-year tax holiday. I expect uh you know, at least 25-30 billion dollars kind of uh inflow coming in for data centers. So, those kind of more larger avenues will open up and we have to do take steps to attract capital.

[00:17:24]This will be a cherry on top, not something that I'm expecting.

[00:17:27]>> Not the baseline, but you'd be happy >> Who will not be?

[00:17:31]>> [laughter] >> I am anyway 100% invested in the markets.

[00:17:34]>> You know, there was there was two two on this question of how to stabilize things and maybe it's already stabilized. We don't know. We'll be wiser in hindsight, but the fixed income guys were saying maybe we need a rate hike. And the counter to that is we're a we're not a a large foreign owned debt market. This is a equity I mean, we're a it's a equity market, not debt market. I mean, when rates go up it leads to selling, not buying. So, I don't know if that does the opposite. So, that's the other debate which I mean, the classical economics says increase rates. I mean, you know, bonds get firmer, rupee gets stronger, etc. etc. But I don't know. I mean, if that is something you've thought about or not, but at least on the fixed income side, we've heard that a couple of times.

[00:18:13]>> no. I think See, we have to think longer term and I do think government is thinking longer term and we have to correct this whole situation. Next time there's an energy shock, we should not be vulnerable to it and we should not be vulnerable to capital flows going out.

[00:18:27]And how do you do that? First, basically uh the biggest problems are we consume more than we produce and we import more than we export. We have to correct those situations. So, we have corrected to some extent on the electronics import side, but I think there's a lot more to be done on the energy side. Energy is the next big item. Gold we unfortunately we can't do anything about. Uh maybe we we maybe we can do something to monetize the domestic gold that we have.

[00:18:53]We have tried and failed over there, but I think still more can be done. But on the energy front, I think that is where the you know, that is why I get that confidence that this energy transition theme. It is not only about moving away from fossil fuel to renewables, but it is also moving away from spending dollars to get our energy requirement.

[00:19:12]So, we should have a domestically produced energy and that is what will make our country far more stable and secure in the future. But, that is a 10-year story. From a year one year perspective, we need to take care of what is urgent and important rather than what is more strategic in nature.

[00:19:29]>> You know, other thing which you've been very bullish on is the defense theme. I just put out some data, you know, I was looking at for the last 4 years the entire defense pack market cap has gone up by 6x. But, the top line and bottom line has gone up only by 1 1/2 or 2x maximum. So, are you saying that, you know, in many of these companies market is over paying the kind of valuation that they should pay? For example, today BDL was a classic, you know, accident for the day.

[00:19:55]For the seventh year in a row, execution has been a bit of a question mark on that company. How do you look at this opportunity? I understand big, you know, long term there is a big time, but near term you think there is a pain?

[00:20:06]>> No, so first of all, let's understand what this long term is.

[00:20:10]Because of the events that I mentioned which is leading to this global industrial capex super cycle, uh defense or the security concerns are definitely a part of it. We used to have US security cover. The NATO nations used to have that. That is not available anymore or at least it is available at a price.

[00:20:27]It is not available for free anymore.

[00:20:29]So, in that kind of a case, you Europe is rearming itself. Japan, which post World War II, you know, had pledged that they will never rearm itself, is again giving a boost to its domestic defense this thing. So, there's a new wave of rearmament that is happening across the world. And the skirmishes that have happened everywhere has made everyone even more sensitive to that fact that we need to We are also still spending only 2% of the GDP.

[00:20:56]And the other nations are spending 4 5% so we need to increase our budget also.

[00:21:01]So, I don't think the defense capex cycle is over.

[00:21:06]But, it might go undergo a transition or it might undergo some kind of a change.

[00:21:11]Valuations can ensure that there are no returns for a year or so.

[00:21:14]Absolutely possible.

[00:21:16]I think the big change that is happening in India is that we are moving away from a PSU led defense capex cycle to now more a private sector led capex cycle.

[00:21:26]Now, the private sector capex private sector has been opened up to defense. If you see the last 2026 DAP, the defense acquisition policy, lot of the R&D where the DRDOs of the world were kind of you know monopolizing this. Now, the private sector will be able to do that. And the way this is structured is that you know first the MOD or DRDO gives the order to the large system integrators who in turn give the orders to the large you know tier one vendors, sub-assembly guys, component manufacturers. And that is the value chain. So, that value chain down the stream is which where the opportunity is still opening up. So, I don't think the defense cycle is over, but the large listed defense PSU defense companies I don't think can be a large multibagger from here. They will be a compounder at best.

[00:22:16]>> It was a sign of things that I think the founder of Solar Industries got I think one of the nation's highest civilian awards, right? I mean, so which is which is quite incredible. We don't we've not seen that uh >> Yeah, but you know I mean, that's a great example, but let me point you also to a fact that we've been tracking this company for last 15 years since 2010. It used to be an explosive company. It still is an explosive company. It uh it has a almost 1.2, 1.3 lakh crore kind of a market cap. The order book for defense is 7,000 crores, which is a big jump.

[00:22:50]But, 7,000 crores and 1 and 1/2 lakh crore market cap is so uh the defense opportunity tends to come about slowly slowly, but once it comes then the valuation tends to be much longer.

[00:23:01]>> No, and just on this one only, I think 10 years ago they did around 11 crores from defense and in the coming year they're talking about 4,500 crores of defense. So, we'll have to see where this goes but you know as you're saying the defense book is just 7,000 crores or there about. Time to wind down guys?

[00:23:15]>> Yes.

[00:23:15]>> Absolutely. Thank you Ravi for coming down to our studio. It's been a great conversation. Thank you. Well, with that it's curtains down on editors round table. Thank you very much for watching.

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