Direct Equities: Rangebound markets, selective accumulation

Medium-term investment case for Indian equities remain positive (BSE-500 gained 5% in FY25). Large cap valuations seem to be at the top-end of Neutral zone but mid/small cap valuations still appear pricey vs. Their long-term averages. Fallout of Trump’s tariff policies/geopolitics and mgmt. Commentary in upcoming FY25 results are likely to be key drivers for investor sentiment. Expect markets to be range-bound but volatile (Nifty-50 between 21.8k - 23.8k); accumulate selectively. 

Highlights

• Growing fear of US heading for stagflation + related toll on global economic growth led to sell-off in US/EU equities.
• The fallout of Trum 2.0 tariff policy led uncertainty saw Gold price spiking 9% in March and 20% YTD.
• Bloomberg data pegs consensus earnings growth forecast for Nifty-50/BSE-500 at 6%-7% for FY25 (vs. 20% YoY earnings growth in FY24), 15%/17% for FY26 and 14%/15% for FY27.
• Sectors: (1) BFSI (more so private banks & HFCs) offer favorable risk-reward balance. (2) Selective plays in FMCG & realty/realty-proxy space (3) Potential tactical plays = PSUs, Energy, Cement and Consumer Durables (4) On the sidelines = IT & US-centric export exposed industrials/auto/manufacturing/pharma on the back of Trump 2.0 trade tariffs and uncertainty.