Market in time correction mode; defence earnings, cement outlook strong, IT faces AI Challenge: Jyotivardhan Jaipuria – News Air Insight

Indian equity markets continue to remain range-bound this year, with investors grappling with high valuations, global uncertainties and muted earnings growth. According to Jyotivardhan Jaipuria, Founder & MD, Valentis Advisors, the market is in a “time correction” phase after the sharp post-Covid rally, and the next big upmove will depend on earnings growth rather than further valuation re-rating.

Market in a breather phase

Explaining the current lull, Jaipuria said: “After a marathon rally, markets need a breather. Valuations were expensive, and instead of a steep price correction, we are seeing time correction, which is healthier.”

He added that while India’s macroeconomic backdrop is strong, corporate earnings growth has slowed. “For 20 years, India had strong micros but weak macros. Now the macros are great, but earnings are stalling. Without earnings growth, valuations alone can’t drive the market higher,” he said.

Sector themes: Cement and defence stand out

Looking at sector opportunities, Jaipuria pointed to cement as a potential outperformer. “The sector has seen consolidation over the last 18 months. With utilisation rising, pricing power will return. That will drive earnings growth,” he said.

On defence, Jaipuria called it a “structural story” backed by government push for indigenisation. Strong order books and steady profitability make defence stocks attractive for long-term investors.

Fed rate cuts and tariff concerns

Markets are also watching the upcoming US Federal Reserve meeting, where a 50 basis point rate cut is widely expected. Jaipuria said Fed cuts usually support emerging markets like India. “In five out of the last seven Fed rate cut cycles, global markets were higher a year later,” he noted.However, geopolitical risks and tariff uncertainty remain. “India came close to a trade deal earlier, but until an agreement is signed, tariffs will weigh on sentiment. The market has adjusted, but removing extra tariffs would be a clear positive,” he said.

IT sector: Short-term relief, long-term concerns

On Indian IT stocks, Jaipuria maintained a cautious view. “We have been underweight IT because US macro headwinds, anti-outsourcing sentiment, and structural changes from AI are long-term challenges. AI may reduce manpower needs, limiting growth for Indian IT companies,” he said.

While cash-rich IT firms could see short-term buying, Jaipuria warned that sustainable growth may remain elusive. “Over a three-year view, IT is not a sector we would overweight,” he added.

According to Jaipuria, investors should focus on sectors with visible earnings growth, such as cement and defence, while remaining cautious on IT. “The next leg of market returns will come from earnings, not valuations,” he concluded.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)