FMCG, Auto And Financials Lead Harsha Upadhyaya's Top Picks As Market Sentiment Turns Bullish

Bullish Market Sentiment: Key Themes and Sector Expectations

India's market has seen a significant shift in its undertone, with a decisive shift towards a bullish outlook. This change is attributed to an improving earnings outlook, easing global risks, and more attractive valuations across Indian equities.

Expert Insights

According to Harsha Upadhyaya, CIO–Equity and President of Kotak Mahindra Asset Management Company, the second half of the year is expected to show continued improvement in the earnings trend, with further strengthening likely in the next fiscal.

Improved Earnings Momentum Expected

• Fundamental analysis indicates a meaningful improvement in earnings momentum.
• Globally, there is hope for a favourable geopolitical environment and a potential peace deal.
• Valuations have been moderated over the last year, with India underperforming.

Key Drivers of Earnings Growth

Banking and financials are expected to drive the next phase of earnings growth, with the sector already demonstrating outperformance despite the market appearing flat in recent quarters.

• Financial stocks are expected to continue outperforming as markets trend higher.
• Consumption-oriented sectors are also strong, with mid- to high-teens earnings growth expected.
• A broad-based earnings recovery is expected, with banking and financials at the forefront.

Preferred Themes and Sectors

The auto sector remains one of Upadhyaya’s preferred themes, with the festive season showing strong year-on-year growth across most segments.

• The auto sector is well-positioned to continue outperforming, with two-wheelers outpacing four-wheelers.
• Structural reforms are expected to support consumption and lending further strength to the automobile sector.