Markets Enter Extended ‘Drag Phase’ Rather Than Deep Correction, Says Vikas Khemani.

The current landscape of global macroeconomic uncertainty, geopolitical tensions, and volatile energy prices continues to shape investor sentiment, as noted by market expert Vikas Khemani from Carnelian Asset Management in his recent discussion with ET Now. While Indian equities have shown notable resilience since March’s lows, Khemani suggests that the market’s next phase may steer towards consolidation rather than a sudden breakout. He emphasizes that even though earnings have demonstrated stability, the true ramifications of global disruptions, notably energy price fluctuations and supply chain issues, will likely be felt during the upcoming Q1 earnings period. Hence, the market appears prepared for these challenges, albeit with a cautious outlook on earnings performance moving forward.

Khemani reassures that significant market declines are unlikely unless there is a drastic escalation in oil prices, which remains a top concern for economic stability. He highlights constructive signals, such as improved global supply expectations and potential diplomatic resolutions that may help stabilize energy prices. Amid these global headwinds, India’s domestic growth narrative remains strong, underscored by encouraging growth figures across various sectors, including consumer goods and credit. While acknowledging persistent pressures like rising costs and supply chain disruptions, he is optimistic that India’s growth trajectory is robust and will sustain itself in the long run.

In terms of sector-specific opportunities, Khemani underscores the importance of selective stock picking, particularly within the mid and small-cap segments, to uncover real value beyond broad index trends. He identifies key opportunities in manufacturing, pharma, and IT, the latter of which is showing signs of a narrative shift that may offer contrarian entry points for investors. Furthermore, he advocates for a stock-specific approach within NBFCs, citing successful positions in companies like Aditya Birla Capital. Overall, Khemani’s outlook paints a picture of resilience amid macro uncertainties, suggesting markets are not on the brink of major decline, yet lack the momentum for a straightforward rally until energy prices stabilize.

Source: The Economic Times

(Expert Note: This report was prepared by the Wealthova team.)