# Capex is happening across sectors but will intensify once external issues ease: Abakkus Asset's Sunil Singhania — retained record
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source: [news](https://highsignal.app/data/news) (news:india-mint-markets) published 2026-10-05 00:30 ingested 2026-10-05 02:56
[original source ↗](https://www.livemint.com/market/capex-is-happening-across-sectors-but-will-intensify-once-external-issues-ease-abakkus-assets-sunil-singhania-11791093171709.html)
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While the Nifty 50 is trading slightly below its 10-year average valuation, its composition still reflects the India of the past, with significant weightage to sectors such as IT services, consumer staples, oil & gas, and banking, said Sunil Singhania, chairman and managing director at Abakkus Asset Manager Pvt. Ltd. So, the index can deliver decent returns, broadly in line with India’s normal gross domestic product (GDP) growth, but may struggle to generate very high growth, he added.
On the contrary, mid-caps and small-caps will represent India's future, so growth will be higher, he added.
Edited excerpts:
The near-term challenge is that the West Asia conflict does not seem to be settling. The situation has become increasingly unpredictable, and that uncertainty is causing concern across multiple economies.
With the situation in West Asia remaining unclear, there is a broader view that oil prices could remain at sustainably high levels. Higher oil, freight, and logistics costs are contributing to global inflation, including in the US. The general view is that inflation could remain sticky until there is some resolution to the conflict.
Bond yields are reflecting that uncertainty, and in India, the market is increasingly pricing in an interest-rate hike.
There is also more anxiety in India because, after two months of FII (foreign institutional investor) inflows in July and August, September has again been challenging. Despite around $135 billion of FCNR (foreign currency non-resident) deposits coming in, the rupee had depreciated to around 94.50 and is now moving closer to 96. FII flows have, therefore, taken a breather.
Our view is that the challenges are predominantly concentrated around the West Asia conflict. If a resolution is reached sooner rather than later, oil prices could fall significantly, and inflation concerns would recede.
Otherwise, GDP growth and corporate profit growth remain reasonably strong. The monsoon has been somewhat weak, but sowing is only about 1% below normal, and there is still hope that the winter crop could be normal.
Larger companies have underperformed. Returns ultimately follow earnings growth, and segments with higher growth tend to command higher valuations. The challenge is that while the Nifty is now slightly below its 10-year average valuation, its composition largely represents the past India. You have IT services, consumer staples, oil and gas, and banks, all of which have relatively limited growth. So the Nifty can deliver decent growth, perhaps in line with India's normal GDP growth, but not very high. Mid- and small-caps represent future India. You have precision manufacturing, renewable energy, EVs, defence and other emerging sectors where growth has been higher. That is why these stocks have performed better.
Having said that, a significant portion of the mid- and small-cap basket is in a euphoric zone, with investors buying purely on themes and stories. One has to be very careful there. But there is also a good set of companies that can grow faster than India's GDP over the long term, with valuations justified by the next three to four years.
Regulators are there to ensure the sector's systematic growth. We have seen multiple instances where regulations may not be welcomed by the industry initially, but ultimately help the sector grow.
From a banking perspective, these businesses have been important sources of fee income, so there could be a knee-jerk reaction. But this is only a consultation paper, and there will be discussions before anything is implemented.
So the impact cannot be assessed yet. We have to see how the proposal is finally implemented.
When you look at index P/E multiples, particularly for mid- and small-caps, they don't always give you the right picture because there are many loss-making companies in those indices.
Within any portfolio, some companies may be more expensive.
In those cases, the growth has to justify the valuation. If a company is growing at 5%, we won't pay 25 times earnings. If it is growing at 20-30%, we may be willing to pay 40 times because the growth can justify that valuation over two or three years.
You have to marry valuation with growth. But if a company is trading at 100-200 times earnings based purely on hope, that is very difficult for us to invest in, given our investment philosophy.
Private-sector capex is picking up, but over the last one and a half years, external uncertainties have made entrepreneurs more defensive. But corporate India's balance sheet has never been better. Defaults are low, and debt-equity ratios are among the healthiest we have seen.
Capex is continuing across autos, steel, aluminium, renewable energy and battery storage. If the external environment becomes clearer, capex intensity could increase significantly. The main concern would be a sharp rise in the cost of funds, but so far we haven't seen that.
Srushti is a markets reporter at Mint. She writes on equity markets, and her areas of coverage range from brokers and exchanges to mutual funds and the fast-evolving alternatives space, including GIFT City, from the financial capital of India. She has an experience of over three years in journalism, and has previously worked at Moneycontrol. She has an undergraduate degree in mass communication and a postgraduate diploma in business and financial journalism from Asian College of Journalism, Chennai.
Srushti prefers meeting people from the industry over making calls. Her work aims to drive impact—her story on illegal gold imports, for instance, caught the government’s attention and contributed to a policy shift. She specialises in turning complex market data into clear, engaging stories so even her grandmother could understand futures and options.
Outside of the newsroom, she enjoys spending money on jewellery and watching thriller films—especially the kind that keep her awake at night. She spends 1.5 hours a day commuting in Mumbai locals, listening to horror podcasts on her way to work. She’s also very talkative—so reach out only if you have lots of time.
Ram Sahgal is a deputy editor at Mint. He has over 20 years of experience in journalism, with previous roles at The Intelligent Investor, Bombay Times, The Economic Times, and The New Indian Express. Between his media roles, he briefly worked at a commodities exchange before returning to his true passion, business journalism. Ram graduated in liberal arts from St Xavier’s College, Mumbai, where he studied films, which explains his move to Bombay Times, where he covered the film industry during the rise of Sunny Deol and Sanjay Dutt. He took a leap of faith to transfer to The Economic Times, and thanks to his restless mind, later moved to cover the commodities beat. Over the past three years, Ram has been tracking the stock markets at Mint. His focus areas include writing about market infrastructure institutions, brokerages, derivatives, and related regulations. His hobbies include spotting trains and understanding the locomotives that power them. In his free time, he takes his octogenarian mother out for drives and goes to the cinema with her on weekends. If he has a dream, it is to write a screenplay for a movie. For now, he enjoys viewing market data on NSE and BSE, observing the shifting mood of Mr Market, and conversing with market experts.
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