“I would not be surprised if the market goes up 10-15% from here over the next nine to twelve months. The worst is behind us. Most of the negative news flow is behind us,” Kothari said.
His comments come at a time when Dalal Street has extended its winning streak to a third consecutive week, the longest such run in 2026. While benchmark indices such as the Sensex and Nifty posted modest gains this week, sectors including pharma, realty and automobiles led the rally.According to Kothari, investors should not expect foreign money to return immediately, but the reduction in outflows itself is a positive development.
“As crude oil goes down, inflation comes down, the fear of interest rate hikes goes down, and slowly currency depreciation will also reverse. As that happens, outflows will reduce,” he said.
He noted that markets have already started pricing in lower crude prices and improving macroeconomic conditions. The benchmark indices have recovered significantly from their March lows, suggesting investors are gradually becoming more comfortable with the outlook.
Kothari expects corporate earnings growth to improve meaningfully in the second half of the financial year after a relatively soft start.”The first quarter may be a little challenging, but as we move into the second and third quarters, things should improve considerably,” he said.
The fund manager also downplayed concerns around the monsoon. While rainfall remains an important factor for inflation and rural demand, he believes current reservoir levels are adequate and unlikely to pose a major risk to corporate profitability.
“I do not think rainfall will be a major risk to corporate earnings,” Kothari said.
On market positioning, he argued that investor sentiment remains far from euphoric despite the recent rally. Concerns around geopolitical tensions and crude oil prices had kept many investors cautious, but that caution is gradually easing.
He also pointed to reasonable valuations in pockets of the market, particularly in banking and automobiles, while noting that growth expectations have risen significantly in capital goods.
Looking ahead, Kothari believes investors should focus less on short-term market forecasts and more on identifying companies with durable business models and pricing power. Such businesses, he said, are better equipped to navigate changing economic cycles and commodity price volatility.
“There are opportunities across sectors, but investors should prioritise businesses with sustainable competitive advantages and pricing power,” he said.
Watch the full conversation here
