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"The market concluded the week on a sombre note, with a sell-on-rally sentiment. Realty fared the worst, as investors turned cautious with diminishing chances of interest rate cuts and weak industry numbers. The PMI data also cast a shadow with a weaker imprint than expected. However, inline results from the IT sector and early signs of a revival in discretionary spending offer a glimmer of hope.

 

Uncertainty surrounding Trump's economic policies and high valuations may impact the stock market in the short term, especially in EMs. Broadly, Q3 results are in-line with the expectations but are not helping the market which is following the sell on news trend. Key events, such as the FOMC meet and Union Budget, will influence market sentiment. While the FOMC maintains a hawkish stance, Trump's push for rate cuts which can add a positive undertone in the future. Expectations for the Union Budget remain subdued; however, the conclusion of this major event without any negative surprises could help alleviate market concerns.
 

The broader market remains under pressure, but the resilience of large-cap stocks is a positive sign. The Indian market has successfully navigated similar challenges in the past, from taper tantrums to geopolitical concerns. The current correction is driven by a combination of factors, including tapering, an earnings slowdown, elevated valuations, and trade uncertainties. We believe the market is now in the final phase of consolidation. With the broad market having corrected by 14%, the downside appears limited, supported by strong long-term economic fundamentals. India's GDP growth is projected to increase from 6.4% in FY25 to 7.0% in FY26, if the earnings growth reverts to the long-term average of 15% in FY26, we can expect the market to move out of the negative trend. For long-term investors, this is an opportune time to remain patient and adopt an accumulation strategy."

 

 

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