Excerpts:
Q. Markets are trading slightly lower today, showing a flattish to mild bearish tone. What’s driving this trend right now, and what can we expect this week?
Kranthi Bathini: The key driver at the moment is strong domestic liquidity. Despite recent foreign portfolio investor (FPI) selling, they’ve now cut down short positions and even started selective buying. This has supported a short-covering rally. Another factor is optimism around a possible trade deal between India and the US, which has kept markets buoyant in the short to medium term. That said, the market recently came close to its previous high near 26,000 but couldn’t hold that range, leading to some profit booking. For now, robust domestic liquidity remains the main cushion for the market.
Q. You’ve earlier mentioned risks like inflation surprises, interest rate shocks, and geopolitical tensions. Which of these do you see as the biggest near-term risk over the next 3–4 months?
Kranthi: Geopolitical uncertainty stands out as the biggest risk. Domestically, India’s macro setup is stable with cooling inflation. But global trade frictions, like the ongoing tariff tensions between the US and Japan, Korea, and China, are creating volatility across Asian markets. Even if India and the US sign a deal, such instability elsewhere could weigh on sentiment. Another risk stems from India’s crude imports from Russia. While it helps stabilise global prices, any policy shift here could cause short-term market reactions. Overall, the bigger risks right now are external, not domestic.
Q. What about the positive triggers? What could lift the markets in this environment?
Kranthi: A successful trade deal between India and the US would be a strong positive trigger. It could improve global investor confidence in India. Currently, foreign fund managers are cautious due to global uncertainty. Domestically, GST rationalisation and continued reforms can stimulate demand in the next few quarters. Inflation is easing, and if the Reserve Bank of India delivers a rate cut in upcoming policies, that could further boost consumption. Additionally, a reform-focused Union Budget could become a key sentiment driver ahead.
Q. Which sectors look promising in the near term, and which ones should investors avoid for now?
Kranthi: Banking and financial services remain strong — they’ve been leading the recent market rally. Defence is another sector to watch; the government’s focus and increased budget allocation make it very attractive for medium to long-term investors.
On the flip side, IT should be avoided in the short term unless you’re a long-term, contrarian investor. Oil marketing companies also look weak for now. So, I’d stay positive on BFSI and defence, cautious on IT and OMCs.
Q. How do you view the ongoing earnings season? Any trends or key takeaways?
Kranthi: According to Crisil, the top 600 Nifty companies are likely to show revenue growth in Q2, though margins might remain under pressure.So far, results haven’t brought any major surprises, neither sharply positive nor negative. The first half of the year has been moderate, reflecting global uncertainty and trade tensions from the past few months. However, GST rationalisation and other reforms should start reflecting in improved earnings over the next couple of quarters. Overall, Q2 has been stable, and we could see stronger growth towards the end of the financial year.
Q. What’s the current market sentiment? Is it too bullish, too bearish, or somewhere in between?
Kranthi: Sentiment right now is positive to neutral. The market has been consolidating near 26,000, with strong support from domestic institutional investors. A clear trade deal or policy boost could easily turn sentiment more bullish in the short term.
Q. The golden question – valuations. Are Indian markets cheap, expensive, or fairly valued right now?
Kranthi: From a global perspective, India remains one of the most attractive emerging markets. However, narratives are shifting rapidly, we’ve seen sentiment move from “Buy India, sell China” to “Buy emerging markets” and back again within months. In the short term, volatility and changing global flows are capping upside momentum. Overall, I’d say India remains a “buy on dips, sell on rallies” market. Around 26,000, follow-on buying has been missing due to earnings uncertainty and weak FPI flows. If earnings strengthen, we could sustain higher levels, but foreign inflows are key for that next leg up.
Q. What’s your investment strategy for the coming week?
Kranthi: It’s better to stay partly in cash. Markets are range-bound and largely stock-specific right now. I’d watch 25,500 on Nifty as strong support and 26,000 as key resistance. Sustaining above 25,500 keeps the short-term trend positive; a breakout above 26,000 could extend the uptrend.
Q. Any specific support and resistance levels for Sensex and Nifty next week?
Kranthi: For Nifty, 25,500 is strong support, while 26,050 acts as immediate resistance. If Nifty sustains above 26,050, we could see a short-term rally.
Q. Lastly, several mega IPOs worth around ₹35,000 crore are lined up as Nifty hovers near record highs. Could this IPO rush lift the index further?
Kranthi: The success of LG’s IPO has already boosted confidence in the primary market. Strong listings can definitely support sentiment.
However, new IPOs also draw liquidity away from the secondary market temporarily. So, while the primary market looks upbeat, both segments will continue to influence each other closely.
Disclaimer: Recommendations, suggestions, views and opinions given by the experts/brokerages do not represent the views of Economic Times.