Aggarwal believes the market’s prolonged consolidation phase is ending and the overall demand environment is strong enough to propel indices higher this year.
Rare earth move positive but no immediate auto re-rating
Reacting to the government’s rare earth policy approval, Aggarwal said the impact will be structural and long-term, not an immediate market trigger.
“This isn’t a quick catalyst for auto stocks. EV penetration in PVs is still low. The policy will ease supply chains over time, but investors won’t buy autos just because of this announcement,” he noted.
He, however, expects two-wheeler makers—with higher EV linkages—to see relatively quicker benefits.
Largecaps to lead before smallcaps catch up
Aggarwal said market breadth has strengthened in recent months, especially among largecaps.“Largecaps offer 15–20% return potential from here. Once they move up meaningfully, investors will rotate into small and midcaps,” he added.Smallcaps, he said, had earlier run ahead of fundamentals, making largecaps the preferred bet for now.
Discretionary consumption: Autos & jewellery shine
Aggarwal highlighted that discretionary consumption remains uneven despite festive-season lifts.
- Autos: Strong numbers and sustained demand outlook
- Durables: Selective improvement
- QSRs: Mixed to weaker trends
- Staples: Inventory correction done; traction likely ahead
- Jewellery: “Despite high gold prices, jewellery firms are posting 15–20% topline growth”
Autos and jewellery remain the standout categories in discretionary consumption.
Paytm: Recovery strong but future gains will be gradual
Paytm’s regulatory clearance for multiple licenses has improved sentiment, but Aggarwal expects the pace of re-rating to slow.
“Most of the negative overhang has lifted. But incremental upside will now be measured and slower,” he said.
Infrastructure & global cyclicals: Sectors to avoid for now
Aggarwal remains cautious on infrastructure and capital goods due to expected moderation in government capex.
He is also underweight global cyclicals such as metals and energy, given weak visibility and external risks.