BFSI remains a key driver of market resilience despite global jitters: Pankaj Pandey

“While the global cues or the global macros are still jittery because China is still attracting about 30% kind of a duty, but overall sense is that the worst is behind us, so we would want to believe that markets are headed higher in subsequent months,” says Pankaj Pandey, Head Research, ICICIdirect.com.

We were just debating whether this is the peak of the good news and whether markets have priced it in all at these levels.
Pankaj Pandey: See, overall sense is from an earnings perspective nine months we have done about 742 odd, growth of about five-six odd percent. Last two days back when I checked, Q4 numbers are largely on expected lines. So, easily thousand kind of EPS would be achieved. We have seen decent improvement on quarter-on-quarter basis.

Overall, sense is that the domestic flows in core categories are intact from a mutual fund perspective and also, from the FII perspective, a bigger sector like banking has seen good amount of flows and technology looks bottomed out, we are no longer seeing selling there.

While the global cues or the global macros are still jittery because China is still attracting about 30% kind of a duty, but overall sense is that the worst is behind us, so we would want to believe that markets are headed higher in subsequent months.

Why is that we have not seen too much of follow-up buying after that big Monday? I mean, the decks are now cleared for perhaps all the concerns in the market, all the clouds on the horizon they have faded away, yet the market is not showing lot of follow-up buying. The pickup from Monday has not happened.
Pankaj Pandey: So, overall, when you look at FII flow, say if I look at NSE 100 as a universe, while BFSI contributes about 34% in terms of weightage, what we have seen is that the outflow is only to the tune of about 9%.

Initially, we have seen good amount of flows largely into banking, but for technology and other sector our sense is that you really do not require that kind of flows and technology while price-wise it looks like it has bottomed out, but our sense is that somewhere down the line we are still not sure whether FY26 is going to be a washout year. So, from that perspective incremental flows are relatively lesser. But since FIIs are no longer negative, I take that as a bigger positive.

What is it that you are making of the earnings which have come by, and I am going to start off with Eicher Motors. RE volumes, of course, have accelerated, they are looking at achieving the highest volumes in FY26, they are saying that the volumes are going to see a further pick up. Do you think that this is going to be one of the key beneficiaries of this entire premiumisation trend which is going to spill through to the two-wheeler segment as well and the fact that this has not really been performing with the likes of say a Bajaj Auto, etc, which have managed to actually move much higher in terms of a stock price action than what Eicher has done.
Pankaj Pandey: So, we would want to believe that Eicher will do relatively better. If I go by the recent quarter performance, volume growth has been pretty impressive at about 24 odd percent. And monthly numbers are also okay.
The challenge for Eicher has been margins, have been sort of weakish on a quarter-on-quarter basis. But overall sense is that the kind refreshes they have planned plus the CV business is expected to do well and they are already doing well in that particular segment, and so from that perspective overall the setup looks good for Eicher to do well this year.

These drone stocks have now almost become ghar-ghar ki khani after what has happened, drones have become the new bullet now let me put it this way. What are you telling your clients now because everybody I am sure must be calling you or been wanting to know which is a defence stocks to buy which has drone or which is a drone company which they can buy, which can fly high.
Pankaj Pandey: So, really do not have a company which caters on the drone side, but from a defence perspective, we are seeing structural shift. To give you some colour, say FY13 to FY22, we have seen acceptance of necessity of nearly 8.5 lakh crore.

And in the last three years we have seen acceptance of necessity of over 9.5 lakh crores and subsequently our sense is that these will get converted to orders and you look at most of your PSUs be it HAL, Bharat Electronics, BDL Mazagon Dock, the overall order backlog is somewhere about six times FY25 revenues and on top of it this is not the end of the orders.

So, for example, we are expecting about 65 crore worth of orders for HAL for Tejas. So, from that perspective, defence is something which we feel that is a buy on dip opportunity, any kind of a dip is a buy opportunity for defence, structurally this segment or this sector looks good to us.