Khemani said concerns around the West Asia conflict have weighed on market sentiment because of their impact on crude oil prices and currencies. However, he believes India’s economic fundamentals and corporate earnings remain on track, and that markets could respond positively once energy prices stabilise.
The fund manager said periods of market uncertainty should be viewed as opportunities for long-term investors rather than reasons to exit the market. Drawing parallels with previous disruptions such as the Covid-19 pandemic and the Russia-Ukraine conflict, he noted that such phases have historically offered attractive entry points for investors.Also Read | Ridham Desai says AI boom may delay return of foreign flows to India
He added that steady domestic inflows have helped support Indian markets despite global uncertainties. According to him, the resilience shown by domestic investors could provide a strong foundation for markets when external pressures begin to ease.
Khemani said Carnelian continues to favour pharmaceuticals, healthcare, contract development and manufacturing organisations (CDMOs), financial services and manufacturing businesses in terms of portfolio positioning. He said the firm focuses on cash-flow generation, earnings growth and risk-reward assessments rather than investing based on market narratives.
Among all sectors, Khemani identified manufacturing as the strongest long-term opportunity. He said India’s manufacturing sector remains at an early stage of development and stands to benefit from import substitution, export growth and continued government support.
“The whole manufacturing space will continue over time, one decade,” he said.According to Khemani, opportunities exist across auto components, specialty chemicals, CDMOs and capital goods, with several companies capable of delivering significant growth over the long term.
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While renewable energy remains a key theme for many investors, Khemani said Carnelian currently has no exposure to solar-related companies. He cited increasing competition and changes in sector valuations as reasons for staying on the sidelines for now.
Khemani said the government is likely to continue focusing on investment-led growth, industrial expansion and import substitution. He said any measures that improve capital market participation would be beneficial, but expects policymakers to remain focused on boosting manufacturing and execution of infrastructure and industrial projects.
Khemani also reiterated his confidence in India as a long-term investment destination and said Carnelian currently has no exposure to overseas markets.
For the full interview, watch the accompanying video
Khemani acknowledged that artificial intelligence (AI) will reshape industries and improve productivity, but questioned whether the scale of investment currently flowing into the sector can generate sufficient returns.
He compared some aspects of the AI investment cycle to the dot-com era, noting that questions are emerging around return on investment and the sustainability of valuations.
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