Nandish Shah, AVP-PCG Research and Advisory at Motilal Oswal Financial Services, expressed an overweight position on diversified financials, automobiles, and new-age tech firms in an interview with Mint. He noted that corporate earnings are projected to grow at nearly 15% CAGR over FY28, despite facing temporary pressures in Q1FY27.
Key Details
Shah highlighted that geopolitical uncertainties have led the Indian stock market into a consolidation phase characterized by higher volatility. Elevated crude oil prices and significant foreign outflows continue to weigh on market sentiment. He emphasized that energy security is becoming a crucial investment theme, as power plays an increasingly central role in the economy.
In the defence sector, Shah pointed out that the Defence Acquisition Council (DAC) has approved Acceptance of Necessity (AoNs) worth ₹52,000 crore for enhancing the capabilities of the army, navy, and air force. This modernization effort aims to address modern threats, including drones and anti-tank systems. The approvals are expected to increase the addressable market for domestic players and improve order inflow visibility. The fast-track procurement procedure could lead to procurements exceeding ₹1.3 lakh crore across various systems, with decisions anticipated within the next 6-12 months.
Background
Shah remarked,
Over the medium to long term, stock market returns closely mimic corporate earnings growth because a stock price ultimately represents the present value of a company's future cash flows.
He noted that while short-term market movements are influenced by investor sentiment and interest rates, long-term growth remains tied to corporate performance.
The focus on diversified financials and defence could influence investor sentiment in the Indian stock market, particularly in sectors related to energy and national security. Elevated crude oil prices may continue to pressure consumer discretionary sectors. Investors will watch for upcoming procurement decisions in the defence sector, which could further shape market dynamics.