“We still feel that it’s better to remain underweight till things improve on the business front,” Argal stated, citing weak client sentiment and US recession concerns.
While the January-March quarter of 2025 (Q4FY25) earnings have been muted, they are broadly in line with the already low expectations.
Financials sector earnings, he noted, have been slightly better in some cases, while IT results met low forecasts but offered muted commentary.
He prefers quality financials with good valuations but is cautious on capital market-related stocks. “It will not be a very secular kind of market, which really helps the capital marketplace.”
Argal believes the recent foreign fund inflows into Indian equities are more tactical than structural, driven by short-term opportunities after a period of underperformance.
“They continuously need to get in and get out of the various markets,” Argal said, pointing to global uncertainties like trade tariffs and muted earnings that have made investors more reactive than long-term focused.
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Argal also flagged concerns over the broader economic environment. Growth estimates for India have been downgraded by 30–50 basis points, and earnings growth expectations for 2025-26 (FY26) have been trimmed to around 12–13%. He believes the market is likely to consolidate rather than continue with momentum-driven gains, given the lack of clarity on global and domestic fronts.
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For the entire interview, watch the accompanying video