Stock picking key as markets navigate AI uncertainty: Amit Khurana

India Inc’s third-quarter earnings season has delivered a broadly steady performance, with early signs that operating pressures are easing after several quarters of margin stress. Market participants say improving earnings visibility could lend support to valuations, though caution persists given valuation dispersion and ongoing uncertainty around the artificial intelligence cycle.

Sharing his view on the quarter in an interview to ET Now, Amit Khurana from Dolat Capital said earnings largely held up against expectations and operating performance appears to be stabilising. He noted, “There were broadly three key trends that we observed for the current quarter. One, earnings held on pretty well in terms of the estimates versus actual delivery… Second, the operating performance has started finding bottoms… And finally, we are trending now towards mid-teens aggregate earnings… So, positive take on the earnings and as we go along the next few quarters this will only rebound further and give the much needed confidence and support to the valuations.”

On stock-specific developments, he said the ₹2,000-crore capex plan by Hindustan Unilever signals confidence in long-term demand, particularly in premium segments. “Capex from FMCG companies… reflects the structural demand that they are seeing over the next few years… HUL expansion especially given the size seems pretty meaningful and we stay positive on that… India is premiumizing fast and franchises which are able to position their products accordingly will probably have a market share sustenance or gains,” he said.

Khurana cautioned against reading too much into intermittent foreign inflows, saying concerns around India’s positioning in the AI wave and valuations remain. “AI wave everybody seems to be talking about it… But to your point on the FII buying… I am not very enthused with a few days of buying… And second, the valuations while they have turned relatively better are not outright cheap even now… one needs to be stock specific,” he said.

He added that domestic consumption continues to be a preferred theme, with a bottom-up approach guiding stock selection. He highlighted Marico as a preferred name, saying, “We have been pro-domestic consumption… We also are beginning to like staples… we have liked Marico… This is a market wherein you will have to do a real hard work of identifying the names… domestic consumption has been our favourite.”

On infrastructure, including developments around NCC Limited, Khurana said the sector has corrected due to slower order flows but fundamentals remain intact. “Infra stocks have taken a big beating… probably because of the slowdown of the NHAI order book… our channel checks are suggesting that this should eventually play out… Specific to NCC, we need to wait for the specific details,” he said.

Discussing the IT sector and developments at Infosys and Tata Consultancy Services, he said investors are awaiting clarity on disruption timelines and growth visibility. “The market will look for very strong evidence on two counts… how far is this disruption going to continue… and secondly, is the kind of opportunities which will come… In the interim… they will broadly be in the range,” he said.