It’s a raging bull market; navigate the next 12-18 months with caution: Pankaj Tibrewal

economictimes.indiatimes.com:

Pankaj Tibrewal, Founder & CIO, IKIGAI Asset Manager, says that we need to navigate the next 12 to 18 months with caution and that IKIGAI should be a risk manager instead of a fund manager as managing risk in the portfolio will be extremely important because the earnings growth has started to slow down. Last year, NSE 500 companies delivered 30% earnings growth. But in FY25, that earnings growth should come down to between 13% and 15% for the NSE 500 universe.

What are you making of the market construct? For the last eight days, FIIs have been buyers and that is reflected in the way some of the banks and the IT names too have been performing.
Pankaj Tibrewal: Our view is that in this raging bull market, the reliance on narratives and myths is increasing rather than focusing on fundamentals, valuations, and numbers.

I think what we are seeing over some time is that there are pockets with frothy valuation and when we look at it from a bottom-up perspective, there are very few sectors that offer a margin of safety as we speak and there are many sectors where investors are ignoring the basics of investing which is balance sheet and cash flows.
So, we believe that we need to navigate the next 12 to 18 months with caution and today we should be a risk manager instead of a fund manager and managing risk in the portfolio will be extremely important because the earnings growth has started to slow down in our view.

Last year, we saw that NSE 500 companies delivered 30% earnings growth. But in FY25, our view is that earnings growth should come down to between 13% and 15% for the NSE 500 universe as a whole and that is a substantial de-escalation as margin tailwinds which were a big supporter of earnings growth in FY24 should