Sunil Subramaniam, speaking to ET Now, highlighted the potential impact of the June quarter earnings on market direction, cautioning investors about near-term risks. He noted that while recent pharma stock rallies were supported by rupee depreciation, the full impact of geopolitical tensions and rising input costs will be evident only in upcoming earnings reports.
Subramaniam advised a cautious approach towards the pharma sector, emphasizing that the previous quarter's earnings do not reflect the current economic situation. He expects consumer durables to outperform FMCG companies due to strong summer demand and high operating leverage, although FMCG margins may face pressure from rising raw material costs.
In the banking sector, Subramaniam expressed a preference for public sector banks over private ones, attributing the recent rally in private banks to short covering rather than genuine investor interest. He highlighted the stronger CASA deposits and improving asset quality of PSBs as advantages.
“The previous quarter is not reflective of the current situation.”
Sunil Subramaniam, speaking to ET Now
The midcap and smallcap rally, according to Subramaniam, has been driven by strong earnings growth and retail investor optimism. However, he warned that this momentum could be threatened by worsening geopolitical tensions or a hawkish RBI stance.
Subramaniam identified consumer durables and capital goods as favorable sectors, citing their insulation from geopolitical shocks and potential benefits from government and private sector capital expenditure.
Background
The Indian stock market has been experiencing volatility due to global geopolitical tensions and rising input costs. Investors are closely watching the upcoming June quarter earnings season for clearer insights into the market's future direction.
Looking ahead, the June quarter earnings season will be crucial in determining market trends. Investors should monitor geopolitical developments and RBI policy decisions, which could influence market volatility and investment strategies.
