Ambit’s Dhiraj Agarwal sees a slow climb for markets, says valuations back in focus

Dhiraj Agarwal, Managing Director of Ambit Investment Managers, believes the Indian equity market is in a better position than earlier this year, but he does not expect any sharp rally.


He has a cautiously constructive stance and expects the market to inch up rather than jump sharply, remaining a stock picker’s market, where careful selection matters more than broad index movements.

Although India’s real GDP grew 8.3% in the September quarter, Agarwal highlights that nominal GDP—which reflects what companies earn—was only 8.5%, slightly lower than the previous quarter.

Corporate earnings are also not very strong at the moment. Nifty earnings grew only around 6–7%, and the BSE 500 (excluding oil marketing companies) delivered just 7–8% growth.

He believes this gap between headline macro numbers and company performance explains why the market has not been able to deliver strong earnings momentum.

Agarwal points to two recent policy triggers that could support markets in the second half of the year: the large GST cut and the steady decline in interest rates. He hopes these measures will revive consumption and improve the earnings outlook.

At the same time, he warns that some channel checks after Diwali show demand weakening in certain pockets, which is why he prefers to stay cautiously optimistic rather than fully bullish.

On the debate around high-growth stocks, Agarwal says the market has clearly become valuation sensitive. He cites the example of Lenskart, where Ambit recently issued a sell call based purely on valuations.

The company is growing, margins have expanded, and there are no corporate governance concerns. Even then, the market is unwilling to reward high valuations, because investors today can find other companies with similar growth at much better prices.

This marks a clear change from the 2018–2020 phase, when expensive consumer stocks kept moving up despite stretched valuations.

For full interview, watch accompanying video

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