“Festivities bring cheer. I don’t know if markets would completely support this line of thought, but all of us can always wish and pray,” he told ET Now, adding that despite India’s stable macro picture, several global and domestic factors continue to weigh on investor confidence.
Global Pressures and Rate Cut Expectations
One of the biggest overhangs, Mistry pointed out, is the prolonged tariff dispute, which has dragged out far longer than expected. “India is caught in the crossfire. Eventually it will get resolved, but until then, higher tariffs in the US translate into elevated inflation,” he explained. This, in turn, has delayed the Federal Reserve’s rate cuts despite cooling inflation and slower job growth.
The Jackson Hole remarks from Fed Chair Jerome Powell have, however, opened a “window” for a September cut, said Mistry. The rate differential between India and the US is now at a 23-year low, giving RBI some room to consider easing, albeit with caution.
Earnings Growth Losing Steam
Back home, corporate earnings are not painting a rosy picture. While the first quarter results had more hits than misses, consensus estimates for FY26 and FY27 have seen their first downward revision since 2022. “There is growth, no doubt, but the extent of that growth is being trimmed every quarter,” Mistry said.
He also pointed out that fiscal measures such as GST collections and government spending amounting to nearly ₹4.5–5 lakh crore — about 1.5% of GDP — will play a crucial role. But the timing of these interventions will decide how effectively they support consumption beyond the festive season.
Sectors to Watch
On sectoral opportunities, Mistry believes consumption patterns are shifting. “Staples may not see big gains—people won’t suddenly start buying more soaps and oils. But the ‘YOLO’ theme—travel, hotels, transport—looks strong,” he said. Cement, pharmaceuticals, speciality chemicals, and financials also remain on his radar.
Weaker Dollar, Stronger EM Story
On the currency front, Mistry noted that the dollar index has slipped from 110 to around 98, historically a bullish signal for emerging markets. “A weaker dollar always helps EM outperformance, as global asset allocators benefit from currency moves,” he explained.However, he cautioned that India’s story is now increasingly being driven by domestic flows rather than just foreign money. “Household savings into equities are still under 5%. If this climbs to even 10%, the impact could be massive,” he said, highlighting how structural shifts in local participation could reshape market dynamics.
Outlook
While the festival season may offer short-term optimism, the broader market texture remains tied to earnings trends, policy shifts, and global currency moves. As Mistry summed up, “The contours of the market will keep changing. What matters most is timing—and patience.”