Stock Market Outlook: Global uncertainty continues to dominate investor discussions, but Rajeev Agarwal, Managing Director of Doordarshi India Fund, believes there are still opportunities in select domestic sectors in India.
Uncertainty likely to persist
Created with AI. Errors are possibleSpeaking exclusively to ET Now, Agarwal said uncertainty is unlikely to disappear anytime soon, even if ongoing negotiations result in an agreement.
“Even if there were to be a deal in the next few weeks, the uncertainty is likely to continue for a much longer period because there is a clear trust deficit between the two nations.”
At the same time, he said volatility can create opportunities for investors. “The good news with uncertainty, sometimes you have volatility, which allows you to get good stocks and good prices,” he said.
Focus on domestic sectors
On investment strategy, Agarwal said the focus remains on sectors that are less likely to be impacted by global developments.
“The key thing that we are doing is trying to look in areas which are not going to be as impacted from a business perspective or from an economic perspective.”
He said domestic sectors in India continue to remain relatively resilient. “In general, the economy seems to be doing all right, and there would be higher inflation, but even then, the domestic play should continue.”
Real Estate remains attractive
Agarwal identified real estate as one of the sectors that continues to look attractive. “Real estate continues to look reasonable.” He pointed out that pre-sales numbers for several real estate companies were strong in FY26 and that many companies continue to guide for strong expectations in FY27.
Banking sector supported by credit growth
Banking and financial services are another area he prefers. “We are seeing credit growth continue. Government is also encouraging credit growth.”
According to Agarwal, the balance sheets of both individuals and businesses are in good shape, which should support continued credit growth if the economy performs reasonably well.
Renewable energy gains importance
The third sector he highlighted was renewable energy. “Clearly, if this war is telling us anything, it is clear that India has to take on more areas of becoming energy independent.”
He further added that, “I think both solar and wind should do well from that perspective.”
FII flows continue to face headwinds
While on the FII flows, Agarwal noted that India has been facing challenges for some time. “Flows has been a challenge for India.” He said that flows have been leaving India since the market peak in 2024 and said currency depreciation has added to the pressure.
“The INR depreciation is not helping the situation.” Agarwal also said the lack of a significant artificial intelligence investment theme has affected India’s ability to attract global capital.
“The other thing, of course, is not having a strong AI place or any AI place where a lot of capital is moving towards. And that is also hurting India.”
Investor sentiment remains weak
As a result, sentiment among overseas investors remains weak. “The investor sentiment has been pretty negative at this point.”
To improve flows, Agarwal suggested reviewing taxation for foreign investors. “Look at the taxes and see how you can make Indian equities more favorable for the investors, especially foreign investors.”
He also called for greater focus on energy independence to help reduce India’s oil import dependence over the long term.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions.)
