Speaking to ET Now, market expert Narendra Solanki, Head of Equity Research at Anand Rathi Shares & Stock Brokers, said:
“See, it was well known that the downside is limited, but there were a few headwinds regarding tariffs and potential decisions by the US government. Following the announcement of the HIRE Act, which is being considered for passage, it has become clear that enacting such an act is complex and won’t happen easily. The market has taken a breather on this, as it doesn’t seem likely to pass soon.
“Additionally, there has been some short covering because the downside is limited, and now things are gradually set to improve in H2. Looking at the latest quarterly results, BFSI and financial services have been performing well, while ER&D and manufacturing have lagged. In H2, we expect at least some stable numbers from these sectors.
“Overall, it is a play where downside is limited and valuations have become attractive. Most stocks and even indices are trading significantly below their five-year averages. Regarding midcaps versus largecaps, we are more positive on midcap IT names compared with largecaps.”
The expert also addressed trends in discretionary consumption, particularly following recent GST cuts in fashion and footwear. “Yes, this is a medium- to long-term positive. We expect H2 to outperform H1 in both discretionary and non-discretionary consumption. We also have a positive view on these stocks post-demerger, as growth prospects improve and balance sheets remain strong. Execution will be key, but overall, the outlook is encouraging.”With IT valuations appearing attractive and midcaps leading the charge, investors are cautiously optimistic. Discretionary consumption stocks are expected to benefit from policy support and stronger post-demerger execution, setting the stage for a potentially stronger second half of the year.
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