Talking to ET Now on market strategy, Kant noted that while the possibility of near-term corrections of 4–7% cannot be ruled out, the broader outlook remains constructive. He believes global signals, particularly from the United States, indicate a preference for de-escalation and eventual stability, which could support equity markets over time.
Largecaps preferred over midcaps
Kant highlighted that largecap stocks, especially in infrastructure and banking, currently offer better risk-reward compared to mid and smallcaps. He identified Larsen & Toubro as a key pick in the infrastructure space, citing the likelihood of stalled projects resuming and strong order inflows supporting growth.In the banking sector, he pointed to strong credit growth trends, although concerns around potential non-performing assets (NPAs) in the near term remain. Despite this, valuations already factor in such risks, making select banks attractive. Among private lenders, Axis Bank and IndusInd Bank were highlighted, while Bank of India and Bank of Baroda stand out in the public sector space due to robust credit growth.
Defence and metals offer tactical opportunities
The defence sector, which has underperformed in recent sessions, is another area of interest for long-term investors. Kant emphasized that companies like Bharat Electronics (BEL) and Hindustan Aeronautics (HAL) continue to deliver strong operational performance and maintain healthy order books. However, he cautioned that investors should adopt a long-term view, as short-term volatility may persist.
Metals, too, are on the radar, supported by ongoing infrastructure push and improving commodity demand. Stocks such as Hindalco, Vedanta, and NMDC are seen as potential beneficiaries of rising industrial activity and firming prices.
Earnings outlook: Is the worst over?
On the earnings front, Kant acknowledged that geopolitical tensions—particularly in West Asia—had initially posed a significant risk to corporate profitability. Earlier projections had estimated Nifty earnings per share (EPS) growth of 12–14% for FY27. However, prolonged conflict could have sharply reduced growth to near-zero levels.
As signs emerge of easing tensions, the outlook has improved, although some impact remains. Kant estimates that earnings growth could still face a 2–3 percentage point hit but should stabilise around a reasonable trajectory. He suggests that much of the негативity is already priced into the market, with current valuations reflecting a forward price-to-earnings multiple of around 17 times.
Short-term pain, long-term gain
While the June quarter (Q1) earnings may still reflect the lingering effects of disruptions, markets are forward-looking and likely to move ahead of near-term disappointments. Kant believes the market has already discounted worst-case scenarios, with downside levels largely tested.
For investors, the key takeaway is to remain cautious but opportunistic. Instead of chasing momentum, experts recommend staggered buying in high-quality stocks, particularly in sectors with strong structural tailwinds.
Investment strategy
The current market environment calls for disciplined investing with a medium- to long-term horizon of 9–12 months. Largecap stocks, especially in infrastructure, banking, defence, and metals, are expected to lead the recovery as macroeconomic conditions stabilise.
In summary, while volatility may persist in the short term, the broader market outlook appears constructive. With valuations becoming attractive and earnings risks moderating, the stage may be set for gradual recovery—provided global uncertainties continue to ease.