Don’t buy the bounce — Deepak Shenoy says wait for earnings commentary before calling the all-clear – News Air Insight

Shenoy is selectively positive on private sector financials but warns that ceasefire rumours are not a reason to re-enter the market — and that most retail stocks remain too expensive despite a 40–50% fall from peaks.

Markets staged a notable bounce on Monday, with ceasefire chatter doing the rounds and Q4 financial numbers beginning to trickle in. But Deepak Shenoy, Founder and CEO of Capitalmind MF, is not ready to declare a turning point — and he has specific, data-backed reasons for holding back.

Why Shenoy is not buying the bounce

The day’s rally was partly fuelled by international news suggesting a possible ceasefire in West Asia. Shenoy has seen this movie before. Geopolitical rumours of this nature — ceasefire talks, back-channel deals, diplomatic signals — have a consistent pattern of being walked back by the end of the day. Building an investment thesis on headlines that typically do not survive 24 hours is, in his view, a mistake.

“These news revelations are usually not true — everybody denies it by the end of the day. If the bounce is on the basis of this international news, then be cautious,” says Shenoy.

The more meaningful catalyst, he argues, will be earnings commentary — not just the numbers themselves, but what company managements say about the war’s specific impact on their supply chains, sales pipelines, and operational visibility. Until that commentary arrives across sectors, a general market re-entry call is premature.

Where he is selectively positive: financials

Within the cautious overall stance, Shenoy carves out one sector where he sees genuine opportunity: private sector financials. Several mid-level NBFCs have reported strong Q4 numbers, and private banks have provided decent early indicators. The key insight is structural — as long as interest rates do not spike materially, the financial sector’s earnings are relatively insulated from the geopolitical disruption affecting industrials, exporters, and supply-chain-dependent businesses.

His read on bank loan growth is nuanced. Gold loan books from banks alone crossed ₹3.5 lakh crore in February — a significant number — and the Jan-March quarter typically sees a seasonal uptick in borrowing post-Diwali. But he flags a critical distinction: loan growth driven by secured lending — gold loans, housing, real estate — is fundamentally different from unsecured personal loan growth, which carries higher asset quality risk in an environment where incomes may be under pressure. The composition of loan growth, not just its pace, is what investors should scrutinise this earnings season.

Sector-by-sector view

Trent was Monday’s top Nifty gainer — up 7% on the back of 20% revenue growth. Shenoy is unconvinced. The 20% growth figure, he notes, is partly explained by favourable base effects from tax and GST changes in the previous year — not necessarily a reflection of accelerating underlying demand. More importantly, same-store sales growth and margin sustainability have not been demonstrated. At current prices, even after a 40–50% fall from their peaks, several retail stocks require consistently high growth for four or more years just to justify their implied valuations. That is a very long runway of flawless execution to price in right now.

The bottom line

Shenoy’s message is disciplined selectivity over broad re-entry. Private financials — specifically private banks and mid NBFCs with strong secured loan books — are the one area where current valuations and earnings direction align. Everywhere else, the earnings season commentary matters more than the numbers. The ceasefire bounce is not a signal. The results are.