Expert View: Market Valuation Looks Stretched; MainTain A 5–10% allocation to gold, says Rishabh Nahar of Qode Advisors

Expert view on markets: Rishabh Nahar, Partner and Fund Manager at Qode AdvisorsIs reduction the overall market expenses and shifting focus to select unique stock ideas where he still sees strong earnings momentum and low valatiy, offering a good balance of risk and reward. In an interview with mint, nahar shares his views on market valuations, sector to watch and strategy for gold. Here are edited excerpts of the interview:

How do you see the market’s performance in Cy25 So far? What is your outlook for the rest of the year?

We are watching the post-q1 rebound not just as a statistical uptick, but as confirmation of our momentum signs reals realigning after a brief Drawdown.

The 4 per center ytd (year-to-date) gain in the nifty 50 versus near 10 per cent in the s & p 500 and nearly 8 per cent in MSCI EM Tells Us Us that Indian Mid- and Small-Caps WERELIL-CAPS WERELILED EARLIARE in the year.

Once Breadth Improved and Volatily Cooled, Our Trend-Following Algorithms Signalled A Switch from DefenseVes Back INTO RISK-On Trades, What Helped Us Capture TEADY GRINDIGER Thrings

Looking ahead, I expect this orderly advance to personal so long as corporate earnings surprises Remain Positive and Global Macro Risks Stayed.

From a risk -management standpoint, we’ll maintain a modest Volativity Skirts Skirts Key Support Levels and Hedge If Our Downside -Break Thresholds are breeded, but for now, but for new long the market’s run.

Does the Indian Stock Market Have Valuation Comfort? Should we be cautious?

On Valuations, our factor overlays highlight that forward pes near 20 times sit at multi-yar highs, which historically compress future exchange returns.

Quantitatively, this means our valuation screens Into Current Pries.

In Practice, We’re Lowering Our Broad -Market Risk Budget and Reallocating it to idiosyncratic ideas, where our earnings -‘Rvision models and low -volumes screen Profiles.

In Sum, while Broad-MARKET RETURNS May Settle INTO MID-Single Digits from Here, A Disciplined Factor Blend and Rigorous Risk Controls Should also Us to Outperform that Baseline.

What is your assessment of Q4 Earnings? Should we expect a better show from Q1fy26 Onards?

Quarter-after earnings pain a picture of breadth rather than brilliance.

Across the top 500 listed companies, Median Profit after Tax Advanced Roughly 10 Per Cent Quarter-On-Quarter While Sales Rose About 5 per per cent, with 69 per cent of firms posting positive protroth prote

Crucially, the dispersion favorite the interior of the market-cap curve: mid-and small-cap names delivered Profit Growth North of 20 per cent, versus low-digit views for carge-caps.

Factor Diagnostics We Run Internally, Profit Revision Momentum, SAles Acceleration, and Operating-Laverage Screens, Confirm That The Earnings is Strongest in Capital Goods, SELECTALS, SELECT METALS, SELECT METALS, SELECT METALS Pricing Power and Execution Gains are translating cleany into cash flow.

At the index level, the nifty 100 “beat-or-meet” ratio has climbed back to 51 per cent, the best reading since mid-2023. This indicates that analysts’ downgrades earlier in the year have finally reset the bar to achievable levels.

Taken Togeger, The Quarter Shows that Profit Growth is Broad-Based Enough to Sustain the Cycle, but not yet explosive enough enough to justify fresh multiple experience on its own.

What are the key triggers that will drive the domestic market? When do you expect the market to have a fresh record high?

Looking ahead, the market’s next leg higher still hinges on a handful of catalysts that are measurable in our models but uncertain in their timing.

ForeMost is Monetary Policy: With Headline CPI Drifting Below The Reserve Bank of India’s 4 per cent midpoint, the window has opened for an initiaal 25- to 50-Basis-point cut; A Sustained Easing Cycle Delhi Lower Discount Rates and Support Rate-Sensitive Factors Such as Quality Growth and Housing Proxies.

A second variable is the monsoon, which the imd now projects at 106 per cent of the long-paper average. Early Rainfall Cold Revive Rural Purchasing Power and Lift Two-WHO-WHO-WHEELER, FMCG and Agro-Inputs Volumes Volumes into the festival season.

Third, Clarity on Us-India Trade Rules, Especially Around Technology Transfer and Critical Minerals, Bold Help De-Risk Export-Linked Earnings Streams.

Finally, Corporate Capex Intent Remains High on Survey Data but is yet to translate into hard speed; A Visible Pick-up in Order Books Would underpin Earnings Trajectories for FY 26-27.

Valuations, meaning, Leave Little Cushion: The Nifty Trades Near 22 Times Forward Earnings, or Roughly One Standard Deviation Above Its Decade Average, SONY DISAPPOITMENT on these TRIGGEGERS Compress Multiples.

That is why, despite our constructive three- to five-yar view on India’s structural story, we controlue to run full invested but factor-babooks tinting books tilting Revision Momentum, Clean Balance-Sheets and Demonstruble Pricing Power, While Hedging Outliers Through Disciplined Risk Overlays Rather Than Trying to Time Six-Six-SIX-MONTHX LEVELS LEVELS In Truth, no one can consistently forecast.

What should be our strategy for defense and psu stocks?

The Indian Defense Industry has Demonstrated Strong Engineering Capabilities in Recent Military Operations and Benefits from Steady Domestic Demandy Demand and Growing Along Along

While the Military-Industrial Complex is Well-Positioned to become a Significant Contributor to the economy, it is challenging to determine whiter with this optimism is already reflected inactions and Whether the sector can deliver truly outsized returns going forward.

Should We Prefer PSU Banks to Private Banks? What Banking Stocks Should One Buy At This Juncture?

We no longer distinguish between psu and private banks – Both segments have delivered strong returns in the past when when operating performance was robust and valuations were attractive.

Our focus today is on identifying banks with future growth prospects areingly underappreciated by the market.

At this Juncture, we do not see any banking stocks offering that degree of asymmetry.

While many banks remain solid businesses, none currently met the elevated returns expectations or risk -REWARD Thresholds We Require for New Convictions.

What are the sectors you believe can outperform in the next one to two years?

One Compeling Growth Driver is the Ongoing Us -China Trade Tensions, which have spurred Higher Import Tarifs and Stricter Regulatory Scrutiny on Chinese Pharmaceutical Suppliers.

India’s Well-Estables API Manufacturing Base, Combined with a Rising Focus on Differentiated Products and Biosimilars, Positions Indian Pharma Companies to Capture These Displated Volmes Markets.

By moving up the value chain-form pure generals to high-complexity formulations and Speciality Injectables-India Firms Can Secure Premium Pricing, Deepen Customer Relationships, Deepen Customer Relationships, and MeaningFully Increase Market Share Over the Next Two Years.

What is the outlook for gold? Is it time to buy or book profits?

We Advocate MainTaining A 5–10 per cent strategic allocation to gold across all time Horizons.

This positioning services as an effective hedege against inflation, negative real rates, and geopolitical uncertain.

We recommend adding to positions on meaningful pullbacks, as even a modest allocation can help dampen the valati of an equity-heavy portfolio.

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Disclaimer: This story is for educational purposes only. The views and recommendations about individual analysts or broking companies, not mint. We Advise Investors to Check With Certified Experts Before Making Any Investment Decisions, As Market Conditions Can Change Rapidly, and Circumstances May Vary.