Synopsis

Strait of Uncertainty

In this month's edition, P Krishnan reflects on India's own "Strait of Uncertainty" — a market range-bound for two years, twice rejected above 26,000, and now facing earnings headwinds amid global geopolitical disruption. Yet his message is one of measured opportunity, not retreat. He argues that the worst is largely priced in and that the environment is right for deploying long-term capital with a two-to-three-year view.

Energy Security

With India's hydrocarbon endowment limited, Krishnan makes a direct case for coal as a foundational energy asset. India's reserves have grown steadily to over 400 Bn tonnes in FY25, with annual production crossing 1 Bn tonnes. Renewables are complementary, but coal is central to any credible energy security strategy.

Atmanirbhar Bharat

In a deglobalising world, India's manufacturing scale and low food import dependency (~10–15% versus Japan's ~60–62%) are genuine structural advantages. Rising two-wheeler exports and Apple product manufacturing from India illustrate the domestic market's power as a launchpad for global competitiveness.

Technology, Digitization & Automation

In an inflationary wage environment, Krishnan favours businesses that reduce labour dependency and deploy productivity tools. AI adoption is seen as a real value driver. He cautions against over-hyped, headcount-driven service models where margin risk is rising.

The Bad & The Ugly

Indian small and midcaps trade at a trailing PE of ~32x — a steep premium to regional peers in the US, China, Japan, South Korea and Taiwan, most of which have stronger IP and innovation profiles. Krishnan attributes the valuation distortion to domestic mutual fund flows rather than business quality, and warns the segment is setting up for significant stress.

In Uncertainty Lies the Opportunity

The standout opportunity is financials — particularly PSU banks, where balance sheets have materially strengthened and FII ownership is near multi-year lows. More broadly, India's resilience to global demand shocks positions it to move up the pecking order as foreign investors return. The advice: be positioned before that happens.