“So, yes, of course, we are navigating volatility at this point in time, and we do not know how long this volatility lasts… markets typically bottom out before the actual end of the war scenario.”

She pointed out that recoveries after crises are usually driven first by valuation re-rating before earnings catch up.

“When the markets start to recover, the initial leg… is led by multiples rerating, and then earnings have to flow through.”

On valuations, she noted that current levels are reasonable but not deeply attractive.

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“Today… the Nifty is trading at about 19 times on a one-year forward, which is slightly below its long-term averages… valuations are reasonable… but not in deep value territory.”
Given this backdrop, the strategy remains cautious but opportunistic.“We will use market corrections to add to equities, but near-term volatility is something that we will have to navigate.”

Banking Sector Stands Out
Among sectors, banking has emerged as a clear outperformer this earnings season, with strong balance sheet growth and stable asset quality.

“The banking sector has seen fairly good numbers… both across balance sheet as well as earnings.”

Credit growth has picked up across segments, supporting expansion. “Credit growth has started to pick up… across industry as well as retail credit.”

Importantly, concerns around bad loans have not materialised.

“The fear of asset quality deterioration clearly has not played out… credit costs are well under control.” With interest rates stabilising, margins could also improve going ahead.

“We do expect… net interest margins also stabilise… and therefore there would likely be a pickup in earnings for FY27.” She added that valuations in the sector remain favourable. “Valuations are clearly on your side… banks, both private and PSU… we are positive on.”

Telecom: Improving Fundamentals
The telecom sector, after years of disruption, is seeing a more stable phase driven by consolidation and gradual tariff hikes.

“This has been a sector where consolidation has played out…” Profitability is improving as users shift to higher-paying plans.

“ARPU expansion has taken place at a gradual pace, and that is aiding profitability.” The outlook remains constructive for leading players.

“Some of the top players are fairly well placed… improvement in profitability is continuing.”

Private Banks Preferred
While both PSU and private banks look attractive, Kurian indicated a slight preference for private sector lenders. “We are overall positive on the banking sector; however… a slight preference for the private sector banks…”

The reason lies in valuation comfort relative to historical averages.

“The multiples are significantly below their long-term averages… the slight preference… is because of the valuation differential.”

Outlook: Stay Selective, Use Volatility
The broader message is clear—markets may remain volatile, but not directionless. With earnings expectations largely intact and valuations reasonable, corrections could offer opportunities for disciplined investors.

For now, the approach remains simple: stay selective, watch global cues closely, and use dips to gradually build exposure.

This article was written by

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