2 weeks Ago
"In the real sense, Q3 and Q4 will provide a clearer picture of corporate India's performance. I’m not as negative on the market as the recent fall would imply, and I recommend investors use this rally to build long-term portfolios," says Pawan Parakh , Geojit Financial Services . It seems the selling is very India-focused, and the chartists we’ve spoken to indicate the selling isn’t over yet? Pawan Parakh: Yes, it's difficult to predict FII flows, and from conversations with technical analysts and chartists, I also sense that some downside might still be pending.
However, from a fundamental perspective, while Q2 results haven’t been great, we must remember that Q2 was impacted by monsoons, heatwaves, and floods in many parts of the country, and Q1 was affected by elections. In the real sense, Q3 and Q4 will provide a clearer picture of corporate India's performance. I’m not as negative on the market as the recent fall would imply, and I recommend investors use this rally to build long-term portfolios.
Do you see further EPS cuts coming, or do you believe that Q2 was an aberration due to monsoons, with the next quarter likely reflecting festive demand and perhaps an uptick? Have earnings misses bottomed out in Q2? Pawan Parakh: I strongly believe that earnings misses have largely bottomed out in Q2. If we look at corporate India's performance, two sectors have disappointed slightly. First is the banking sector, where we’ve seen a rise in NPAs from unsecured loans.
Second is the consumer sector, where demand has slowed down. However, the festive season was reasonably good, and in banking, unsecured loans are short-term, so we’re likely nearing the end of this cycle. I believe analysts have already factored in a moderate Q3 for both sectors.
The earnings downgrade cycle appears to be largely over, and I don’t anticipate significant downgrades from Q3 onwards. Which sectors do you expect to see upgrades in over the next 6 to 8 months? Pawan Parakh: IT is one sector where we expect upgrades. US policies are becoming more inward-focused, tech spending has been low for two to three years, and the appreciating dollar benefits the sector.
Banking could also see upgrades, as many companies have already made provisions, and Q3 might see fewer slippages. Additionally, industrials should perform well, especially with the revival of the capex cycle. These sectors are likely to see both earnings recovery and stock price performance.
What do you think will bring FIIs back to the Indian market? Pawan Parakh: October saw a shift of money from India to China, and with Trump's policies favoring a more inward-looking US, funds are moving from emerging markets, including India, to the US. However, considering India's contribution to global market cap and growth, this trade may only last another 10-15 days. Stock Trading Algo Trading Made Easy By - Vivek Gadodia, Partner at Dravyaniti Consulting and RBT Algo Systems View Program Stock Trading Point & Figure Chart Mastery: A Comprehensive Trading Guide By - Mukta Dhamankar, Full Time Trader, 15 Years Experience, Instructor View Program Stock Trading Derivative Analytics Made Easy By - Vivek Bajaj, Co Founder- Stockedge and Elearnmarkets View Program Stock Trading Options Scalping Made Easy By - Sivakumar Jayachandran, Ace Scalper View Program Stock Trading RSI Trading Techniques: Mastering the RSI Indicator By - Dinesh Nagpal, Full Time Trader, Ichimoku & Trading Psychology Expert View Program Stock Trading Advanced Strategies in Stock Market Mastery By - CA Raj K Agrawal, Chartered Accountant View Program Stock Trading Technical Analysis for Everyone - Technical Analysis Course By - Abhijit Paul, Technical Research Head, Fund Manager- ICICI Securities View Program Stock Trading Mastering Options Selling: Advanced Strategies for Success By - CA Manish Singh, Chartered Accountant, Professional Equity and Derivative Trader View Program Stock Trading Technical Analysis Made Easy: Online Certification Course By - Souradeep Dey, Equity and Commodity Trader, Trainer View Program Stock Trading A2Z of Stock Market for Beginners: Stock Market Course For Beginners By - elearnmarkets, Financial Education by StockEdge View Program Stock Trading Macroeconomics Made Easy: Online Certification Course By - Anirudh Saraf, Founder- Saraf A & Associates, Chartered Accountant View Program Stock Trading Futures Trading Made Easy: Future & Options Trading Course By - Anirudh Saraf, Founder- Saraf A & Associates, Chartered Accountant View Program Stock Trading A2Z of Stock Trading - Online Stock Trading Course By - elearnmarkets, Financial Education by StockEdge View Program Stock Trading ROC Made Easy: Master Course for ROC Stock Indicator By - Souradeep Dey, Equity and Commodity Trader, Trainer View Program Stock Trading Complete Guide to Stock Market Trading: From Basics to Advanced By - Harneet Singh Kharbanda, Full Time Trader View Program Stock Trading Ichimoku Trading Unlocked: Expert Analysis and Strategy By - Dinesh Nagpal, Full Time Trader, Ichimoku & Trading Psychology Expert View Program Stock Trading Market 104: Options Trading: Kickstart Your F&O Adventure By - Saketh R, Founder- QuickAlpha, Full Time Options Trader View Program Stock Trading Market 103: Mastering Trends with RMI and Techno-Funda Insights By - Rohit Srivastava, Founder- Indiacharts.
com View Program Stock Trading Introduction to Technical Analysis & Candlestick Theory By - Dinesh Nagpal, Full Time Trader, Ichimoku & Trading Psychology Expert View Program Which areas of the consumption basket do you think are now worth investing in? Pawan Parakh: The current selling is broad-based and driven by the need to exit India, not by individual stock fundamentals. Consumer discretionary has performed reasonably well, especially in categories like jewelry, apparel, and retail. With the decent festive season, we expect this to accelerate.
After the correction, valuations have become attractive, making these segments appealing. What is your view on quick commerce, considering some regulatory pressure? Pawan Parakh: Both Zomato and Swiggy have faced challenges over the last decade, including potential competition, but none have materialized. It’s a tough business to execute.
They’ve strengthened their positions, and I don’t see room for new players in food delivery. The growth in users will likely continue, though I’m concerned about how the market will value these companies once growth slows to 15-20% in three or four years. For now, we remain invested in these businesses.
Where do you expect buying to resume, considering the hit to PSUs and defence stocks? Pawan Parakh: BFSI is one sector that should do well, particularly large caps. The top five banks—HDFC, ICICI, Axis, Kotak, and SBI—have not shown red flags in NPAs. Deposit growth has been decent, and the deposit-credit growth mismatch is correcting.
This sector hasn’t participated in the rally over the last two years, aside from ICICI Bank, and valuations are attractive. I expect FII buying to return to this sector in the coming months. Metals are cooling off despite China’s stimulus measures.
Do you think this indicates a global demand slowdown? Pawan Parakh: Demand for metals in China is driven by both domestic spending and global demand, and neither seems to be recovering soon. I don’t expect metal prices to rise quickly. China’s economy is facing serious challenges, and a few stimulus measures won’t lead to a U-shaped recovery.
I’m not very optimistic about the commodity sectors, which are highly volatile. (You can now subscribe to our ETMarkets WhatsApp channel ).
