Gold’s run may cool, consumption and pharma could lead next leg of growth: Sailesh Raj Bhan

After a year when gold glittered brighter than equities, Sailesh Raj Bhan, CIO – Equity Investments at Nippon India Mutual Fund, believes it’s time for smart investors to rebalance. Speaking to ET Now in the Samvat 2082 Fund’Tastic Manager series, he said gold has had its golden phase, but equity valuations have now turned “sensible” — setting the stage for steady, earnings-led compounding over the next year.

“You have to asset allocate smartly. When extremes happen — like gold’s 50% outperformance — it’s time to look for better-priced opportunities such as equities,” Bhan said.

Equities back in focus: Sensible compounding possible

Bhan emphasized that the next market phase will be defined not by liquidity or foreign flows, but by earnings recovery and valuation rationalization.

“Whether FIIs buy or sell is secondary,” he explained. “What matters is earnings growth and what price you pay for it.”

He expects 13–15% earnings growth in FY27, led by a revival in consumption, tax savings, and GST benefits.

“The correction has brought valuations to reasonable levels. Largecaps are attractively priced, and earnings-led returns are possible,” he added.

Consumption revival, pharma in focus

Among key opportunities, Bhan sees consumption and pharma sectors leading the next rally.
While autos have already had a strong run, he expects staples, durables, and consumer discretionary stocks to surprise on the upside as urban and rural demand revives.

“Many consumer companies focused only on margins in the last five years. Now, the growth mindset is coming back,” he said.

On sectors, he added, “Pharma is a buy for the next year, while I would avoid industrials in the short term.”

Gold’s shine may fade: Time to rebalance

Gold and silver investors, Bhan said, should now rebalance portfolios after outsized gains.
“When an asset class outperforms 40–50% over others, reallocating 10–20% back to equities makes sense,” he advised, calling it “the real discipline of asset allocation.”

AI to benefit consumers, not just tech

Discussing AI and IT themes, Bhan said India’s real opportunity lies in companies using AI efficiently, not necessarily those building the technology.

“India may not build global AI products yet, but companies leveraging AI to enhance efficiency and sales will lead in the long run,” he noted.

He added that IT services firms must “re-engineer their approach” to adapt to AI-driven productivity changes.

Market outlook: Correction over, opportunity ahead

According to Bhan, Indian equities are in a much healthier phase than last year, with valuation bubbles behind and global headwinds easing.

Largecaps have corrected 7–10%, midcaps and smallcaps 30–40% in places — creating selective opportunities.

“Last year, there were no ideas to buy; today, 10–20% of the market looks sensible,” he said. “It’s not a time for euphoria, but for disciplined, earnings-based investing.”