Indian equity markets are likely to remain stock-specific in the near term, while foreign institutional investor (FII) flows could make a comeback as global investors begin looking beyond the crowded AI trade, Tushar Bohra, Partner at Invexa Capital, told NDTV Profit.
Bohra said currency volatility and crude oil prices remain the biggest macro risks for domestic equities. However, measures taken by the government to stabilise the rupee have eased investor concerns, while crude oil is likely to remain adequately supplied unless geopolitical tensions escalate considerably.
He cautioned that the market is becoming increasingly unforgiving towards companies that disappoint on earnings, with execution likely to emerge as the biggest differentiator for stock performance.
ALSO READ: BSE Shares Rise Nearly 2% After July Market Share Hits Record Premium Segment Level
"Markets are likely to remain stock-specific and execution-driven going forward, while FII flows could return as global trades near saturation," Bohra said.
Private Banks, Pharma Among Top Bets
On sector preferences, Bohra continues to favour private banks and non-banking financial companies (NBFCs), despite near-term pressure on banking margins.
He expects the better-managed private lenders to deliver superior shareholder returns, while select public sector banks could continue outperforming their peers.
The pharma sector also remains constructive, particularly large-cap companies, according to Bohra. He also sees cement and steel emerging as attractive contrarian opportunities, while consumption stocks could surprise positively if earnings improve even modestly.
Among other themes, he believes automobiles and textiles stand to benefit from easing tariff pressures, while logistics and water-related businesses could evolve into multi-year structural growth stories. He also pointed to early signs of a cyclical recovery in the chemicals sector.
IT Valuations May See More Pain
Bohra believes the banking sector continues to face pressure from net interest margin (NIM) compression, although stronger franchises are better placed to navigate the environment.
On information technology stocks, he warned that further valuation corrections cannot be ruled out, with the June and September quarter results likely to provide a clearer picture of the impact of the ongoing disruption in the sector.
He added that investors should prepare for major earnings surprises in both directions as companies report their quarterly numbers.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
