Market Outlook and Investment Strategy: Miresh Joshi’s insights

“In Indian context, earnings have been soft, and widespread markets are more evaluated, which causes severe improvement. Now, the hope of recovery procurement is based on the rise of earnings. The market is looking at the upcoming tax reduction – expected in the first quarter of the next financial year or in the previous part – can stimulate consumption, private investment and capex. If these factors are aligned, they can run a redo -recovery of earnings, “says Marksmith India’s Head Equity Maresh Joshi. Edited quotes:

ET Now: Rajesh has mentioned that next week will be very interesting. I have a question in that regard. Can it be an interesting week because of the shift of capital flows that we are looking at emerging markets like China? Despite its illness fundamentals, China has given a 30% return, which attracts FII flow.

There is also a vote that the risk of a global recession from the tariff trade war may be at the end of its tail, and the US. Exceptionalism can be the peak. Given these factors, should we expect a recovery or rebound from here?

Maresh Joshi: No one knows for sure – not even Trump – what can happen or what it will bring next. But these elements are creating uncertainty, and markets dislike uncertainty, which is why we are seeing such a reaction.

In Indian context, earnings have been soft, and extensive markets are overly evaluated, which causes sharp improvement. Now, the hope of recovery procurement is based on the rise of earnings. The market is looking at the upcoming tax reduction – expected in the first quarter of the next financial year or in the previous part – can stimulate consumption, private investment and capex. If these factors organize, they can run a recovery of earnings.

We are looking for a few key data points:

1. Spread the bond yield and earning yield:
   
   • The spread has become about 2%. HIST, during the past updates, the bottom of the market has been a strong indicator of the bottom of the market. If this trend continues next week or month, we look at Indian markets stable and rebounding.
2. Nifty 500 stocks and 200-day moving average:
   
   • Currently, only 15% of the Nifty 500 stocks are trading above their 200-day moving average.
   • Similar patterns were observed during the Covid Crash (2020), 2022 cell- and F and 2014 correction.
   • In those cases, markets were integrated for a few weeks/months before starting recovery.
3. DOLLAR LAR Index Capping Out:
   
   • The Dollar Lur Index seems to be top out, which is good news for emerging markets like India.
   • However, the uncertainty around the tariff and yen trade can keep the Dollar Lee’s instability.
4. Yen Carry Trade and Rate Hik:
   
   • If there is an increase in more aggressive rates, it can rise not only for emerging markets but also for Nasdaq.
   • The market is facturing in the middle rate additional cycles, but an unexpected move can cause instability.

Despite these uncertainties, the good news is that the Champions Trophy is on – so at least there is something to be distracted by market concerns!

And now: Let’s talk about the FII-Dii flow. Given the four months of data, the FII has paid Rs. 1.2 lakh crore has been withdrawn, while DII has raised Rs. 1.26 lakh crore has been entered-the FII is greater than what he has pulled.

On the basis of one year-to-ray, this trend continues, DIIS has contributed more than FIIs. Despite improvement, and some indicators also enter the field of bear market, does this show constant confidence in Indian equity? Can we expect optimism among retail investors?

Maresh Joshi: The elasticity remains strong, and you are absolutely true. SIP has been released there, but at the same time, the fresh monthly SIP flow remains stable.

Long -term – retail investors deserve credit for understanding and investing in the combination impact of markets in 3 to 4 years.

However, investors should start to moderate their expectations. There was an extraordinary return in the last two to a and 9 years, but the actual long-term market return should be about 15-16% CAGR.

This year, investors may need to adjust their return expectations due to both domestic and global factors.

Looking at the global markets, outside the US, India is the next best investment place. The main reasons include political stability, government capex initiatives, financial roadmap clarity and earnings reacovery procurement expectations.

If the market improves, the evaluation will enter the reasonable value area – which is a positive signal compared to other emerging markets.

ET Now: Given the improvement, if retail investors want to make a new entry, is this the right time? If yes, which areas in the current market scenario look like a safety mesh?

Maresh Joshi: Our field rotation model, Panare, is publishing rural themes as attractive at this stage.

Agrocamicals:

• Expectations of good Rabi season and La Nina terms indicate strong agricultural outputs.
• This can benefit agrochemical companies.

Hospitals:

• The hospital sector is greatly affected by global programs.
• Asset-light expansion models and new bed additions are maturation, which improves income per captured bed and leads to the growth of the investment matrix-length-more good earnings.

Selective Banking Shares:

• Deposit growth is growing, and CASA ratio can stabilize fundamentals in the normalization sector.

Overall, we are selective in our approach, focusing on domestic and rural themes. Providing stable investment opportunities, these themes should play in the next quarters.