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Indian stock markets have continued their upward march even as foreign institutional investors remain largely on the sidelines. Investor attention has increasingly shifted towards earnings performance and stock-specific opportunities rather than relying solely on overall market momentum.

Speaking to ET Now, Shreyash Devalkar, Head-Equity, Axis MF said the June-quarter earnings season has so far been more resilient than initially feared, with listed companies reporting only limited impact from geopolitical tensions and inflationary pressures.

Earnings resilience despite macro concerns
Devalkar believes the focus has shifted back to corporate earnings after the results season. While smaller companies have faced some challenges, the broader listed universe has remained relatively insulated.”We looked at the internals of the market. They are always driven by earnings growth, and that is what, at the end of the day, the market has come back to after the results season. Earlier, it was expected that the June quarter would see a significant impact from the war and inflation. While it definitely affected smaller companies, the commentary from listed companies has largely suggested that the impact has been benign,” he said.

He added that higher nominal GDP growth and inflation could actually support revenue growth across several sectors.
“Higher nominal GDP growth and inflation would actually help revenue growth this quarter in many segments. There have been price increases, which are reflected in improving credit growth. We are looking at companies where higher pricing and higher revenue growth will come with minimal impact on margins. In some segments, the price increase may more than compensate for higher raw material costs, allowing margins to remain broadly intact,” he added.
Largecaps may finally catch up
Midcap companies have consistently delivered stronger earnings growth than largecaps over the past several quarters. However, Devalkar believes improving nominal GDP growth could help narrow that gap.

“That has been the case for many quarters now. Midcaps have consistently delivered stronger growth, while largecap growth has remained subdued. In my judgment, largecap companies generally cannot grow too far away from nominal GDP growth. With nominal GDP growth improving because of inflation, there is a case for largecaps to see an uptick in headline revenue growth,” he said.

IT still lacks growth triggers
Despite attractive valuations, Devalkar believes the IT sector needs stronger revenue growth before becoming compelling again.

“When the growth for any sector is below 5%, it becomes difficult to generate meaningful equity returns. Even after combining low dollar revenue growth with rupee depreciation, free cash flow yields, dividends and buybacks, the overall return is only reasonable, not exciting. Unless dollar revenue growth improves beyond 5%, it becomes difficult to build a strong investment case,” he said.

He also pointed out that some global IT peers benefiting from the AI wave are trading at lower valuation multiples.

“One should not only look at valuation. Since growth is below 5% so far, returns need to be evaluated more holistically,” he said.

Auto ancillaries preferred over OEMs
Within automobiles, Devalkar said his preference remains firmly tilted towards auto ancillary companies rather than vehicle manufacturers.

“Broadly, we are more positive on auto ancillaries than auto OEMs. Traditionally, auto ancillary companies depended heavily on the domestic auto cycle. Today, many of them have diversified into non-auto businesses and exports, making them an attractive play on India’s manufacturing story. That is why we continue to have meaningful exposure to this space,” he said.

Pharma and healthcare remain portfolio favourites
Devalkar said the investment case for pharmaceuticals has evolved, with domestic businesses driving consistent growth while international operations have stabilised.

“There are two parts to pharma—domestic and international. The international business is broadly getting into a base and is reasonably priced. On the domestic front, growth remains strong and is comparable to, or even better than, many FMCG companies. That is why pharma continues to fit well within our portfolio,” he said.

He added that the firm’s healthcare exposure extends beyond pharmaceuticals.

“Our exposure is not only to pharma but also to healthcare, including hospitals and diagnostics. We remain positive on the entire healthcare space,” he said.

Defence remains a structural story, but valuations need caution
While maintaining a positive long-term view on defence, Devalkar advised investors to be selective as valuations have become richer.

“Defence is a long-term structural story, and there is no doubt about that. However, unlike three years ago, these structural themes are no longer in the early stages. Whether it is power or defence, these sectors have now been discovered. Investors need to be cautious because of valuations,” he said.

Crude oil remains the biggest risk
On market risks, Devalkar believes recent developments have largely been supportive for equities, though crude oil prices continue to warrant close monitoring.

“There have been more incremental positives than negatives. Cooling crude prices and the measures taken by the government and the central bank have been supportive. The biggest risk continues to be crude oil because it remains highly unpredictable. The monsoon is also a risk, but it is broadly known and largely priced in,” he said.

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Shares of Tata Motors (Commercial Vehicles) rallied as much as 5% to their day’s high of Rs 420 on the BSE on Wednesday after the company outlined an ambitious roadmap for the next two years, targeting double-digit EBITDA margins, free cash flow of 7-9% of revenue, and annual investment spending of 2-4% of revenue by FY2028 as it pursues global expansion, electrification and higher-margin digital businesses.

At its Investor Day 2026, the company said it had already achieved several of its FY2027 targets ahead of schedule, including margin improvement, cash generation and strengthening its leadership position in heavy commercial vehicles.

Here’s what brokerages are saying:

JM Financial: With a buy call and target price of Rs 475, the brokerage implies an upside of 19% from current levels. Analysts said Tata Motors’ management remains optimistic on the long-term outlook for the commercial vehicle business, backed by healthy GDP growth, sustained infrastructure spending, and rising e-commerce penetration.

The brokerage also noted that GST-driven freight efficiencies continue to support demand for multi-axle trucks. While elevated diesel prices, commodity inflation, geopolitical uncertainties and the possibility of interest rate hikes remain near-term challenges, management believes these headwinds are manageable and do not materially alter the sector’s long-term growth prospects.

Also read: Tata Motors CV bets on global expansion, EVs and digital businesses for next phase of growth

Nomura:

The foreign brokerage has maintained its Neutral rating on Tata Motors with a target price of Rs 400. It said medium and heavy commercial vehicle demand has improved in June as concerns related to the recent war have eased.Following a plant visit, Nomura highlighted several initiatives undertaken by the company to enhance products and services through technology and digital integration. According to the brokerage, these efforts should strengthen Tata Motors’ long-term competitiveness and improve customer economics.

However, Nomura remains cautious on Iveco, citing weak performance over the past six months. It said it is awaiting greater clarity on the integration process and the realisation of synergies before turning more constructive on the stock.
For its forecasts, Nomura expects MHCV volumes to grow 5% each in FY27 and FY28, while EBITDA margins are estimated at 12.6% and 13.3%, respectively. The brokerage noted that volumes could see an upside if Tata Motors gains market share. It also expects Iveco’s EBIT margins to improve to 2.4% in FY27 and 5.5% in FY28.

Motilal Oswal: The brokerage has a Neutral rating and a target of Rs 416, implying 4% upside. It has turned cautious on the near-term outlook for Tata Motors’ commercial vehicle business, citing recent geopolitical tensions and their potential impact on the Indian economy. It also expects margins to remain under pressure in the near term. Read more: Tata Motors PV eyes over Rs 6 lakh crore revenue by FY31

Factoring in a more measured demand environment, Motilal Oswal now expects Tata Motors’ commercial vehicle volumes to grow at a CAGR of 6% over FY26-28. Based on this, it estimates revenue, EBITDA and profit after tax to grow at a CAGR of 8%, 8% and 10%, respectively, during the same period.

The brokerage said the stock appears fairly valued at 21.7 times FY27 estimated earnings and 18.6 times FY28 estimated earnings. The valuation is based on 12 times FY28 estimated EV/EBITDA for the core business, in line with peers, along with an additional value of Rs 12 per share for Tata Motors’ stake in Tata Capital.

South East Water (SEW) has announced a new chief executive designate after its previous boss resigned.

The heavily criticised water company said that John Halsall will take over from David Hinton, pending regulatory approval.

Halsall has previously worked for Thames Water, South West Water and Network Rail.

The announcement comes as SEW remains under fire for repeated water supply failures in Kent and Sussex and grapples with major infrastructure issues.

Halsall said that his priorities were “responding to customers’ immediate concerns” and delivering on short term improvements.

In the longer term, Halsall said that he would deliver the company’s largest ever investment programme of £2.1bn to “improve reliability and resilience”.

He added: “I look forward to working with our customers, community partners, regulators and colleagues to rebuild trust in South East Water, drive the improvements the business needs to deliver and make the changes people want to see.”