The March quarter earnings growth was driven by BFSI, Auto, technology, and oil and gas, with smallcaps rallying on retail liquidity. Shibani Sircar Kurian discussed the risk in the broader market for FY25. Nifty companies reported 13% earnings growth. PSUs are favored pre-elections. Capex in power, defence, and infrastructure is expected to continue.
Kotak s Shibani Sircar Kurian favors largecaps for risk reward, backed by market perspective, macro stability, GDP growth, corporate earnings, IT sector transformation, and positive rural income trajectory from normal monsoons to boost consumer durables pack. Kurian also says that mass consumption has clearly been lagging the premium end and therefore monsoons play a very important role in getting the rural income trajectory back on track.
Largecaps have better valuations, while signs of improvement in mass consumption are emerging. Caution is needed for PSU stocks with concentrated ownership, but some public sector banks have reasonable valuations based on return ratios and earnings improvement.