Domestic brokerage house Motilal Oswal Private Wealth (MOPW), in its May 2025 Alpha Strategist report, noted that the bulk of event-driven volatility—both global and domestic—appears to be behind us or largely priced into the markets.
In today’s deals, India’s fear gauge, the India VIX, has declined over 3 percent to its day’s low of 17.91 on Wednesday, May 28. Meanwhile, the Indian benchmarks, Sensex and Nifty were down around 0.28 percent in intra-day deals.
Against this backdrop, the firm believes it is now time for investors to shift their focus from macro events to corporate earnings, as early indicators point to improving performance by India Inc.
Earnings Take Centre Stage as Markets Stabilise
According to MOPW, early Q4 FY25 results signal a healthy corporate earnings trajectory, and the Nifty 50 is expected to deliver a 14 percent CAGR in EPS over the next two years. With large-cap valuations having moved from “attractive” to “fair” levels following the recent rally, the firm believes return expectations must be moderated going forward.
While mid and small caps are still trading at a premium relative to their long-term historical averages, MOPW acknowledged that selective opportunities are beginning to emerge in these segments as well.
India’s Macro Fundamentals Remain Supportive
The wealth manager stated that India is relatively better positioned compared to global peers, citing macroeconomic indicators such as a declining 10-year G-Sec yield, a relatively stable rupee, contained inflation, and ongoing fiscal discipline.
It further highlighted that concerns around economic slowdown are being balanced by positive trends including record-high GST collections in April 2025 (up 12.6 percent YoY), a rising manufacturing PMI, and strong export figures—all of which suggest that economic activity may be picking up pace. Additionally, foreign institutional investor (FII) flows have turned net positive for two consecutive months, indicating renewed investor confidence in the Indian market.
Strategic Asset Allocation: Tailored Approaches for Equities and Debt
In terms of investment strategy, MOPW recommends a lump sum approach for Hybrid, Large Cap, and Flexi Cap funds, given the market’s stabilisation and fair valuation zone. On the other hand, for Mid and Small Cap categories, the firm suggests a staggered investment approach over the next 2–3 months, with any market pullback offering an opportunity for more aggressive deployment.
In the fixed income space, the wealth manager noted that benign inflation and slowing growth have allowed the RBI to adopt a more accommodative stance, pivoting towards growth support. The 10-year G-Sec yield has remained stable and gradually declined, aided by favourable demand-supply dynamics and RBI interventions such as OMO purchases, term repo auctions, and USD/INR swaps.
Given the current yield environment, MOPW believes the steepening of the yield curve makes accrual strategies more attractive, while cautioning that long-term yields are not compelling enough for duration plays.
Neutral View on Gold After Record Highs
Gold prices touched all-time highs in April 2025, driven by global uncertainties. However, MOPW now considers gold to be overstretched, as some of that uncertainty has started to ease. As a result, the firm maintains a neutral stance on gold from an asset allocation perspective.
Motilal Oswal Private Wealth’s latest strategy note underscores a paradigm shift in investor focus—from reacting to macro events to riding the wave of corporate earnings. With much of the uncertainty now in the rear-view mirror and India’s economic indicators showing resilience, the stage appears set for fundamentals to take charge.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
