The MUTED Market Trend Reflects The Fact that MUCH OPTIMISM Surrounding a Recovery in Domestic Earnings and Esing Global Risks, Such as Tariff-Related CONCERNS, HAS ALREREDYE BEEN FACTORED in. After a consorte fall in corporate earnings in Q2 and Q3 FY25 Results, Q4 has provided a glimpse of an upgrade in earnings. In Anticipation of Recovery in Domestic Capex and Moderation in Inflation, The Market Expects that FY26 will be much better than fy25. However, after the recent market rebound, the market is waiting to goes further about the details, IE, Q4 have shown about a 10-12% rebound in earnings, which may not be the not ben may not ben Current Premium Valuation. The need is that it should sustain higher growth in the long term, like towards an average of 15% growth, to keep alive the one-yar forward p/e of India at 20-21x.
Diverging views has emerged amid signs of a global economic slowdown and escalating geopolitical tensions in the middle East. The world bank has lowered its global gdp growth forecast for Cy25 by 50 Basis points to 2.3%, with only a marginal improvement expected in cy26 to 2.5–2.6%. The downgrade is larger Driven by Increasing Trade Friction, Policy Uncertain, and Subdued Investment Activity, Resulting in Growth Forecast Cuts for Nearly 70% of Economies. Against this backdrop, the Indian market is projecting a modest earnings growth of Around 10%, which may not be enough to sustain the prevailing positive sentiment. Therefore, the upcoming Q1fy26 earnings-due in the next 2-3 weeks-
Secondly, the temporary pause in reciprocal tarifs, which is currently on a 90-day grace period, is set to expire in July. So far, The Markets Have Shown Little Concern About It, Buoyed By Expectations of a Constructive, Long-Term Bilateral Trade Agreement (BTA) with the Us Such An Agreement Is AGREEMENT Is AGREMENT DEREMENT DEREMENT DEREMENTE Long-Term Risks Associated with Tariff Volativity and Deglobalization trends. However, investors remain watchful for concrete developments, as any delay or setback could reignite concerns, particularly with the rising cost of operations in an incraving global element.
Additionally, Escalating tensions in the middle East have introduced a note of caution in both global and domestic markets. India, which was basking under the cut of crude prices, is taking a setback from the risk in Risk. In the aftermath of the gaza conflict, israel has escalated its responsive to Iran’s advancing nuclear amables, increasing fears of a broader regional crisis. The potential involvement of the us in this complex situation has further unsettled Investor Sentiments. Despite this, markets witnessed a reliable on Friday, Driven by Hopes of a Possible Diplomatic Breakthrough Between the Us and Iran.
Domestic Players are exploreing the pattern to book profit under the risk of geopolitical tension and Lack of a new trigger. In the future a domestic trigger could be the continuity of the earnings outlook in Q1fy26, whereas globally it could be the smooth completes of bta and moderation in Middle East Tension Regarding Whiter Clarity is expected in July. This means that the market may continue to trade in a Volatile Pattern Within The Narrow Range of 24,500 to 25,250 for the Nifty50 for the Nifty50 Index, as Noticed in the Last 4-5 Weeks. Large-Cap Stocks are anticipated to outperform during this period, with a selective approach recommended for mid and small caps. Should Tensions Escalate, 24,000 is expected to act as a strong support level. To cross beyond 25,500, Steady UPSide in Domestic Q1 Earnings Growth, Concrete BTA and Drop in Global Tensions are required.
The Author, Vinod Nair is Head of Research at Geojit Financial Services,
Disclaimer: The views and recommendations made Above are that of individual analysts or broking companies, and not of mint. We Advise Investors to Check With Certified Experts Before Making Investments Decisions.
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