Amid a sell-off driven by macro pressures, analysts suggest savvy investors can find value in quality domestic businesses, while cautious optimism grows about the Indian markets’ outlook.
Heavy profit-taking has swept through broader markets as investors wrestle with a difficult mix of higher US Treasury yields, firmer oil prices and renewed caution around risk assets. In that backdrop, Sharad Avasthi of SMIFS argued that periods of fear can be the best time for long-term investors to build positions in quality companies, rather than chase the market when sentiment is already strong.
Avasthi said the present sell-off is being driven less by company-specific weakness and more by macro pressures that are unsettling traders across asset classes. Rising US 10-year yields, which have pushed towards 5%, are reducing the appeal of equities, while crude prices are climbing on geopolitical tensions. He also pointed to the Reserve Bank of India’s large foreign currency non-resident deposit buffer as a support for the rupee, even as currency moves remain a key concern for markets.
His preferred areas reflect that cautious but constructive stance. Avasthi named defence-related names such as Hindustan Aeronautics and BEML, alongside large private-sector franchises including HDFC Bank and Reliance Industries. He said he is avoiding precious metals for now, suggesting that the immediate opportunity lies more in businesses tied to earnings visibility, balance-sheet strength and domestic demand than in defensive havens.
The broader market view is not limited to one strategist. Bank of America Securities has turned more positive on the Nifty after two years of caution, saying several of the risks it had flagged earlier have already been absorbed by the market and projecting further upside. Other strategists, including analysts at Centrum Broking and YES Securities, have warned that the durability of foreign inflows will depend on crude, bond yields and geopolitics, while remaining constructive on banks and non-bank lenders as a medium-term theme.
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