June Quarter Earnings Will Shape Market Direction, Cautions Sunil Subramaniam Amidst Near-Term Risks.
Market expert Sunil Subramaniam has issued a cautionary outlook for investors, attributing it to rising geopolitical tensions, increasing input costs, and the repercussions of global conflicts on corporate earnings. While he remains positive about certain domestic sectors like consumer durables, premium consumption, and capital goods, he anticipates that heightened volatility may characterize market dynamics in the coming months. This volatility is likely to arise as the impacts of escalating crude and raw material costs manifest in Q1 earnings reports.
Subramaniam has highlighted a mixed but actionable landscape for sectors such as pharmaceuticals and FMCG. He pointed out that recent rallies in pharma stocks were largely influenced by rupee depreciation, benefiting export-oriented firms. However, given the rising costs of active pharmaceutical ingredients and disruption in global supply chains, he advised against extrapolating positive results from the recent quarter. Meanwhile, he expects consumer durables to perform well offsetting rising costs through strong demand during the summer months, while FMCG companies may face tightening margins due to escalating raw material costs, particularly if rural demand diminishes due to uneven monsoonal conditions.
On the banking sector, Subramaniam favors public sector banks over private lenders, highlighting their robust CASA deposits and stronger alignment with capital expenditure cycles. He noted that recent movements in private banks’ stock prices may reflect short-term fluctuations rather than genuine investor interest, especially as foreign institutional investor (FII) flows remain cautious. With upcoming earnings reports critical to market direction, he recommends maintaining balanced portfolios and being prepared for volatility in a market landscape marked by geopolitical uncertainties and fluctuating demand conditions.
Source: The Economic Times
(Expert Note: This report was prepared by the Wealthova team.)