Comparing it to a “seatbelt” that quietly cushions against market volatility, Lokapriya highlights the importance of allocating 20–30% of portfolios to high-quality bonds, especially in today’s uncertain global environment.
He believes fixed income is not just about safety but about steady compounding and risk management, making it a foundational element in long-term wealth creation. Edited Excerpts –
Q) Nifty closed with marginal gains in June, but for the first six months of 2025, it is up over 7%. How do you see markets for the rest of FY26? Any big events to watch out for?
A) The scene is the place for a lovely outcome of markets moving higher, and closing CY2025 with a 10% to 12% gain. However, the big elephant in the room is US Tariffs.
India is expected to conclude the talks by the end of July 2025. And it is evident that India would not budge on allowing access to US agricultural or dairy products, as it is detrimental to the livelihood of 60% of India’s farmers.
Indian government bond yields are anticipated to remain stable as traders await the weekly debt auction. The central bank’s substantial liquidity withdrawal operation is fostering investor caution. Rate cut bets have increased following a drop in retail inflation, while shorter duration overnight index swap rates are expected to experience paying pressure due to the RBI’s cash withdrawal.
A tariff deal without the above two items is the big event to watch for and markets would take a decisive directional move based on the outcome of the U.S. Tariff deal with India.
Q) How are you managing the volatility in your portfolio? Any key learnings which you would like to share from 1H2025?
A) We are running well diversified portfolios with good earnings visibility.
Furthermore, we are taking a balanced approach in rebalancing portfolios to volatile decisions such as raising and lowering tariffs.
Q) One of the reports suggested that India Inc.’s profits have grown nearly 3x faster than GDP since FY20. What structural factors are driving this divergence?
A) 2020 was a watershed moment for India’s corporate in managing cash flows and maintaining sufficient liquidity to counter uncertain periods.
Since 2020, many Indian companies have balanced capital expenditure versus profit growth admirably well.
Moreover, a number of Sunrise sectors, old-world in many respects such as Defence, Railways, Semiconductors are structurally allowing Corporate India’s profits to growth faster than the GDP
Q) With the China+1 theme gaining traction, which Indian sectors are best placed to attract global capital and scale?
A) In Electronics and Semiconductors: growth is Fuelled by import substitution ,PLI. US and Europe shifting sourcing from China to India.
China is the leader in Electronics System Design and Manufacturing (ESDM), (40% of output and 30% of exports). India stands at 2% therefore huge room to grow.
The rising share of electronic content across automobiles, CD, Industrial translates into a higher addressable market for EMS. India semiconductor market size to surpass $55 bn by 2026.
India’s electronics market is at $150 bn, to grow to $500 bn and create 6mn jobs by 2030. PM Modi‘s goal 100% of electronic manufacturing in India.
Q) How is fixed income as an asset class looking for long-term investment? How much money should one allocate as a hedge to combat volatility?
A) In an uncertain world, fixed income is your portfolio’s seatbelt—quiet, steady, and critical when volatility hits. Allocating 20–30% of your portfolio to bonds can help cushion equity swings and deliver a reliable income.
Today’s environment of moderating rates and strong credit spreads makes this a smart time to lock into high-quality instruments, such as government bonds, AAA corporates, and select high-yield credits.
Think of it as earning while you wait—letting your capital work quietly in the background. The goal isn’t just safety—it’s smart, steady compounding through cycles. In a well-built portfolio, fixed income isn’t optional—it’s foundational.
Q) Which sectors are likely to remain in the spotlight in 2H2025?
A) Energy as a sector will be in the spotlight in 2H2025. India with 1.4 billion population, urbanization, 22 GW by 2032, net-zero by 2070. Retrofitting coal-fired plants for efficiency and nuclear hubs.
Renewable energy, targets of 500 GW by 2030 (50% non-fossil fuel electricity), with PLI, waived transmission charges, National Solar Mission, Hydro and Wind. Nuclear power generation target of 100 GW by 2047.
For managing solar and wind energy, Battery energy storage systems (BESS) demand to reach 60 GW by 2030. India’s abundance in thorium, uranium, solar, and wind reduce import dependency.
Q) Can we say that we are in a “stock picker’s market” ahead? If yes, what are the key traits investors should look for in FY26 picks?
A) Yes Indeed, India was and is a stock pickers market with over 6,000 companies to select from. We aim to look for stocks that have strong earnings visibility due to an acceleration of business, recovering balance sheets.
Q) Gold has also seen a tremendous run in 2025 – how do you see the yellow metal shining in 2H2025? Time to book profits or add on dips?
A) Past two years have had multiple war-like situations and the US too joined the conflict.
And the tariff has left countries finding ways to control inflation. Against this backdrop, Gold continues to be a hedge against inflation and an investment vehicle.
Q) How should one play the small & midcap theme? Has the profitability improved compared to large caps? What does the data suggest?
A) The cumulative 100bps rate cut significantly reduces borrowing and working capital costs, especially for capital-intensive sectors like power utilities (thermal/renewable) and mining.
Infrastructure spending is poised to benefit ahead of the upcoming budget, potentially accelerating revenue growth by 12–18%. The mid cap sector is expected to grow at 17% to 20% outpacing 8% to 10% growth of the large cap.
Q) Any sector that is running out of steam and investors should carefully pare their positions?
A) Telecom as a sector has huge levels of debt, and regulatory and court interventions and therefore remain cautious.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
