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Expert view on markets: Shrikant Chouhan, Head of Equity Research at Kotak Securities, believes that a trade war , Q4 earnings, foreign capital flows, and the monsoon will be the key factors shaping the Indian stock market in the short term. In an interview with Mint, Chouhan shared his views on the domestic market outlook, recommended stocks from the IT and consumption sectors, and discussed investment strategies for navigating market volatility. Here are edited excerpts from the interview: What are some short-term triggers for the domestic market? Multiple factors will likely determine the course of the domestic market in the near term.
The RBI MPC is expected to cut the repo rate by 25 bps each in the April and June policies, accompanied by a change in stance to accommodative. Q4FY25 earnings performance by the corporates would be another important event for the equity markets. Apart from these, uncertainties regarding the tariff war, INR movement, and FPI flows could keep the markets volatile.
The market will also watch the IMD forecast for the upcoming monsoon, where a normal to above-normal forecast would be cheered and vice versa. Nifty is still 13 per cent down from its peak. Should we expect the index to cover this gap in the next 4-6 months? Over the medium term, we believe that the Q4FY25 earnings performance would be crucial.
Further, the post-result commentary from the management would be equally important, as that would help the market participant get direction about what can be expected in the coming quarters. We must be wary of any earnings downgrades based on Q4FY25 earnings and management commentary. On-time arrival and good monsoon would be another positive event for the market.
What should be our strategy for sectors such as IT at this point? The deterioration in the macro environment will weigh on Q4FY25 numbers and FY26E guidance. We expect a sequential revenue decline for all large IT companies for the March 2025 quarter due to seasonal weakness, lower billing days, and marginal deterioration in demand. The fallout of tariff threats by the US is a slowdown and uncertainty in spending.
The 20%+ correction in the IT index from the peak captures the concerns. Assuming a no-recession scenario, there are upsides in plenty of stocks. Long-term revenue growth implied in the stock price stands at nearly 5-7 per cent for many large companies, reasonable in our view.
Infosys , TCS , Tech Mahindra , Coforge , and Indegene are our key picks. The key risk to our call is a recession in the economy—such a scenario could weigh on multiples. Is the consumption theme still attractive or it has been discounted? Which stocks would you recommend from this space? We expect soft volume growth for staples in the near term, impacted by persistent weakness in urban demand and margin pressure owing to raw material inflation and adverse operating leverage.
For discretionary, we expect strong performance in the near term from cigarette and alcoholic beverages, transient growth moderation in jewellery, and continued weakness in QSRs (quick-service restaurants) and paints. We are positive about Varun Beverages , Pidilite Industries , United Spirits , Godrej Consumer Products , and Tata Consumer . Which sectors may generate alpha in the next one year? In the BFSI space, we find the valuations reasonable.
In other sectors, the approach should be stock-specific. What should be our strategy for mid and small-caps at this juncture? In these uncertain situations, one could prefer large-caps with select exposure to strong mid-cap and small-cap companies. How should retail investors invest in a volatile market? Given the uncertainty and volatility in the markets, the approach should be to hold onto stocks and sectors with strong growth outlooks and use market corrections as an opportunity for long-term investment.
Having said that, the stock to be held or bought should be fundamentally strong, and one should avoid narrative stocks. Read all market-related news here Read more stories by Nishant Kumar Disclaimer: This interview is for educational purposes only. The views and recommendations above are those of the expert, not Mint.
We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary..
