'Balanced India-US portfolios fared better'

Saurabh Mukherjea has a simple message for investors in Indian equities: it's time to look beyond. The chief investment officer and co-founder of Marcellus Investment Managers believes that with jobs in India drying up due to the US tariffs, consumption slowdown and tepid corporate earnings, it “will be tough for a market already trading at record-high valuations to move any further”.

- DiptiSharma

His solution: A balanced portfolio—one-third each in Indian equities, US smalland mid-caps, and gold.

Edited excerpts of Mint’s interview with Mukherjea, one of India’s most closely watched fund managers:

The past year’s been a whirlwind of geopolitical tensions and market swings, yet the Nifty50 hasn't moved much. With returns being rather muted and investors staying cautious, what do you see as key risks and opportunities for Indian equities in the coming year?

The biggest challenge for India right now is that earnings and profit growth have slowed sharply over the last two years, mainly because white-collar job creation has stalled—even shrinking with IT layoffs. Around 40 million white-collar workers indirectly support another 200 million in services, forming the backbone of India’s consumption engine. With jobs drying up, con-

sumption, which is 60% of GDP, has got jammed, which means earnings growth has slowed. And with earnings not growing, it's tough for a market already at record-high valuations to move any further—that’s the core challenge.