India Stocks: Buy Dip as Earnings Surge Nears

Indian equity markets are currently in a consolidation phase, with the benchmark Nifty achieving fresh record highs while mid and small-cap indices remain below their peaks. Rupen Rajguru, a senior advisor at Julius Baer, views this period as a strategic buying opportunity, anticipating a significant acceleration in corporate earnings growth starting from FY27. He points to strong potential in sectors such as banking, consumer discretionary, and consolidated industries like aviation, telecom, and cement, which are benefiting from improved pricing power.

Rajguru's outlook is underpinned by expectations of robust earnings growth, a reversal from the subdued performance observed over the past year. He advises investors to add Indian equities to their portfolios during this consolidation. Key areas of interest include mid-tier banks poised for outperformance due to rising credit growth and stable asset quality. Furthermore, government stimulus measures are expected to boost consumer spending, particularly in rural areas and discretionary purchases, driving demand in sectors like automobiles.

While acknowledging strong primary market activity, Rajguru cautions about valuations in specific segments like EMS and capital market plays. He anticipates that the Reserve Bank of India's upcoming monetary policy might delay a rate cut due to strong GDP figures, though a reduction is still possible in February. The overall sentiment suggests a promising outlook for Indian equities as the market gears up for an earnings-led upswing.