Pankaj Tibrewal, Founder and CIO of IKIGAI Asset Manager, expects significant improvement in market earnings, with Nifty earnings growth projected to accelerate from around 8.00-8.50% in FY26 to 12.00-13.00% in FY27. According to Tibrewal, earnings acceleration represents the key trigger for markets moving forward, positioning India favorably despite current global uncertainties.

Current Earnings Performance

The ongoing earnings season has delivered results largely aligned with market expectations. While some impact emerged from labour code-related provisions, particularly affecting IT companies, overall corporate performance has remained reasonable across sectors.

Tibrewal noted that most IT companies and banks have reported satisfactory numbers, with the broader market earnings season now gaining momentum.

Market Positioning and Outlook

Indian stock markets are experiencing volatility amid global geopolitical tensions, foreign investor selling, and rupee depreciation. However, Tibrewal attributes the recent correction primarily to global uncertainty rather than domestic fundamental weakness. He emphasized that India remains well-positioned from a medium to long-term perspective, particularly once geopolitical noise and US market corrections are factored into valuations.

Sectoral Investment Opportunities

Several sectors have emerged as attractive investment opportunities following recent market corrections:

Banking Sector: Private sector banks appear particularly well-placed in the current environment, offering compelling value propositions after recent adjustments.

Pharmaceutical Sector: Both CDMO (Contract Development and Manufacturing Organization) players and domestic generic companies are showing improved attractiveness after a period of weakness.

Automotive Sector: Auto and auto ancillary stocks, which demonstrated strong momentum earlier, have corrected in recent weeks, creating potential buying opportunities for investors.

Capital Goods: Select companies with strong order books and multi-year visibility have become focus areas as valuations have reached more reasonable levels compared to historical periods.

Commodities and Metals Outlook

Tibrewal maintains a positive stance on metals, particularly non-ferrous metals including copper and aluminium. He believes natural resources will increasingly function as tools of geopolitical negotiation, enhancing commodity values over time. Rising demand coupled with developing supply gaps in key metals supports this optimistic outlook.

For steel specifically, while the third quarter may remain subdued due to earlier price weakness, recent domestic market price increases could generate positive surprises in fourth-quarter earnings if current trends sustain.

Investment Strategy

The investment approach focuses on sectors with strong fundamentals that have experienced reasonable corrections, creating entry opportunities. Companies with robust order visibility, reasonable valuations, and multi-year growth prospects represent preferred investment themes in the current market environment.

Indian equity markets experienced significant selling pressure on Wednesday, with benchmark indices posting sharp declines as investor sentiment turned cautious amid rising volatility and global market concerns.

Market Performance and Opening Signals

The domestic equity markets witnessed substantial corrections during Wednesday's trading session. Key market performance indicators showed the extent of the decline:

Gift Nifty futures, which provide early indications for the Indian market opening, traded 5 points lower at 25,249 levels, suggesting a negative start for the upcoming session.

Volatility Surge Indicates Market Uncertainty

Market volatility indicators reflected the heightened nervousness among investors. India VIX, which measures fear and uncertainty in the markets, experienced a significant jump of 7.60% to settle at 12.73 levels. This substantial increase in volatility suggests that investors are pricing in greater uncertainty and potential market swings.

Technical Outlook and Key Levels

Despite the current weakness, analysts note that the market appears oversold at current levels, which could potentially lead to a pullback rally from lower levels. However, technical indicators suggest caution, with a break below 25,100 potentially accelerating the decline toward 24,800 levels.

Global Market Pressures

International markets also faced selling pressure, contributing to the negative sentiment in Indian equities. Asian markets declined following Wall Street's performance, where all three major indices posted their steepest single-day declines in three months. The global selloff was attributed to concerns over potential trade tensions and bond market volatility.

Institutional Activity and Currency Movement

Foreign and domestic institutional investor activity showed contrasting patterns during the session:

The rupee continued its weakening trend, depreciating 7 paise to close at a record low of 90.97 against the US dollar. This decline was attributed to strong dollar demand from metal importers and persistent foreign fund outflows.

F&O Ban and Market Structure

SAIL and Sammaan Capital remain in the F&O ban period, having crossed 95% of the market-wide position limit. This restriction affects trading activity in these securities within the futures and options segment.