Expert view: Sandip Raichura, CEO of Retail Broking and Distribution and Director at PL Capital, believes the benchmark indices can move around 10% higher from the current levels. He says markets today are better prepared to deal with geopolitical disruptions than they were a few years ago. In an interview with Mint, Raichura said he remains optimistic that earnings growth will continue to strengthen over the coming quarters rather than being pushed out beyond Q4.
Can an end to the US-Iran war trigger a sustained rally and make the benchmarks end the calendar year with gains? How do you see the second and third-order effects of higher oil prices playing out?
The geopolitical tensions in the Middle East have been one of the key overhangs for global markets, alongside concerns around the monsoon and the higher interest rate regime that investors have been factoring in over the next couple of years.
We believe that the conflict will eventually move towards a resolution, particularly given the broader global economic implications and the political considerations surrounding the US midterm elections.
Once hostilities ease, crude oil prices are likely to stabilise, while supply chain disruptions across globally traded commodities should gradually normalise.
This, in turn, could help moderate inflationary pressures. A combination of easing geopolitical risks, stable commodity prices and improving macroeconomic visibility could provide a meaningful boost to investor sentiment.
We remain constructive on Indian equities and believe the benchmark indices have the potential to move around 10% higher from current levels.
Has the market bottomed out, or can it fall by another 10% if the Middle East conflict continues?
Markets today are better prepared to deal with geopolitical disruptions than they were a few years ago.
Countries have diversified their energy sources, businesses have reconfigured supply chains and shipping routes, and investors have become more resilient to intermittent bouts of uncertainty.
That said, the Middle East continues to be a critical energy and trade chokepoint.
Any major escalation could trigger another round of volatility, particularly through higher oil prices and risk aversion.
While such developments are inherently difficult to predict, we believe any correction is likely to be limited.
The Nifty could retest its recent lows if tensions intensify, but we do not expect markets to decline significantly below those levels as domestic fundamentals remain supportive.
How do you see the current valuation? Is it time to trim exposure to equities?
We believe this is not the time to reduce equity exposure. Instead, investors should consider adding to equities in a phased manner and gradually become more constructive.
India is entering a period where several policy initiatives are expected to translate into stronger execution across manufacturing, infrastructure, power and defence, supporting earnings growth over the next two years.
A cessation of hostilities in the Middle East would further strengthen market sentiment.
We also expect foreign institutional investors to gradually return to Indian markets as valuations in AI-led global technology themes stabilise and investors rebalance towards fundamentally strong, high-growth economies such as India.
The direction of the US Dollar Index (DXY) will remain an important variable, and our view is that it is more likely to soften than strengthen, which could be supportive for emerging market flows.
How should retail investors navigate the current environment? Should they increase exposure to fixed income and safe-haven assets?
Retail investors should avoid making investment decisions based on short-term market volatility. Maintaining a disciplined and systematic investment approach remains the most effective strategy.
We continue to favour equities for long-term wealth creation while also seeing merit in maintaining exposure to gold and silver as portfolio diversifiers.
Rather than attempting to time the market, investors should continue investing through systematic investment plans and use periods of volatility to gradually build quality portfolios.
If you were to invest now, which sectors would you look at?
Our preferred sectors remain manufacturing, infrastructure, power and defence, where policy support and increasing capital expenditure are expected to drive sustained growth.
We also continue to remain constructive on precious metals such as gold and silver as part of a balanced portfolio, particularly given the uncertain global environment.
How do you see the Q1 earnings so far? Should we raise our hopes from the current quarter, or can earnings growth be delayed beyond Q4?
The Q1 earnings season has been encouraging and, in several cases, has surprised positively.
Corporate performance has generally exceeded expectations, reflecting resilient domestic demand and improving business momentum.
Additionally, the monsoon has progressed better than initially anticipated, which should support rural consumption and broader economic activity in the coming quarters.
While some sectors may continue to face near-term challenges, the overall earnings trajectory appears to be improving.
At this stage, we remain optimistic that earnings growth will continue to strengthen over the coming quarters rather than being pushed out beyond Q4.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
