DSP MF's Sahil Kapoor: Bonds Beat Equities Amid Slowing Growth, Weak Sales

• Bonds are more attractive than equities due to high real yields and slowing nominal growth, according to DSP Mutual Fund's Sahil Kapoor.
• The 10-year government bond yield offers strong real returns, with India's real yield near 5.4%, or 2.5%+ after adjusting for core inflation.
• Nominal GDP growth has slowed, with corporate sales growth for BSE 500 at 7.5%, making 20% profit growth expectations for companies unrealistic.
• High equity valuations (25x trailing earnings for general stocks, 30-40x for mid/small caps) are unsustainable given current earnings growth.
• Kapoor sees relative value in large-cap IT stocks and prefers large caps over mid/small caps for equity exposure, despite them not being "cheap."

Why It Matters: Understand why bonds may be a better investment than stocks now.