Indian Markets Supported by Domestic Liquidity, but Valuations Questioned
Strong domestic liquidity continues to support Indian markets, but valuations are being questioned against fundamentals and growth expectations.
Expert's View
Sameer Dalal of Natverlal & Sons Stockbrokers remains cautious on earnings visibility for FY27, while favoring long-term prospects in banking and real estate, advising caution on metals.
Market Trends
- Domestic liquidity provides support to Indian markets
- Recent short covering has helped the market rebound from lower levels
- Valuations are questioned against fundamentals and growth expectations
- Earnings visibility for FY27 looks weak
Sector-Wise Analysis
Banking
Sameer Dalal remains firmly positive on banking, calling it one of the strongest structural themes in India's equity market.
- Valuations for private sector banks have corrected and now appear more reasonable
- HDFC Bank is a long-term compounding story still playing out
- ICICI Bank, Axis Bank, and State Bank of India are key beneficiaries of India's credit-led growth cycle
- Higher-risk lenders such as IndusInd Bank, IDFC First Bank, RBL Bank, and Yes Bank could offer sharper upside, albeit with higher risk
Real Estate
Sameer Dalal maintains a constructive long-term outlook on real estate despite near-term softness.
- India's property market remains structurally strong
- The mid-income segment is currently under pressure and may stay subdued for the next year to 18 months
- Premium and luxury housing continue to show strength
- Developers with exposure to large urban markets are better positioned to benefit from improving cash flows over time
Metals
Sameer Dalal advises caution on metals, warning that commodity cycles often peak when sentiment is strongest.
- Commodity cycles often peak when sentiment is strongest
- Rising prices temporarily boost profits and make valuations appear attractive
- This stage is typically followed by demand destruction and margin compression
Investment Strategies
Sameer Dalal recommends selective stock picking or a broader banking ETF for medium-term exposure to banking.
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