Speaking to ET Now, market expert Nischal Maheshwari said that the market’s ability to hold key levels even during periods of global uncertainty suggests that investors are betting on an eventual settlement between Iran and the United States.
“At the moment the market is telling you that this is likely to be resolved,” Maheshwari said. He pointed out that benchmark indices did not crack below key support levels even when crude oil prices rose sharply, suggesting that investors believe “it’s done and dusted” and that behind-the-scenes negotiations are underway between the two countries.
According to him, the current strategy for investors should remain simple – “buy on dips.”
The banking space sees a shift towards private lenders
The banking sector, however, saw a mixed response during the week, especially after State Bank of India’s earnings performance disappointed investors.
Maheshwari acknowledged that there was an apparent disappointment in the numbers, though he added that a deeper assessment would require understanding management commentary and detailed announcements.
However, he believes that the broader trend in the financial sector is undergoing a transition.
“SBI has done very well in the last one-and-a-half years. Now is a good time to take some profits and go into largecap private sector banks,” he said.
The expert noted that PSU banks have delivered significant returns in the past year and investors can now find better value in private sector names like HDFC Bank and ICICI Bank.
He highlighted that valuations among several large private lenders are currently attractive, particularly with HDFC Bank trading near historically low price-to-book multiples.
Auto sector’s rally counters valuation concerns
Among the sectoral performers, automobile and defense stocks were the underperformers during the week. Maheshwari, however, cautioned against passenger vehicle makers when the segment saw a sharp rally.
“Auto has run a bit,” he said, adding that the benefit of lower GST rates and favorable demand conditions seems to be mostly in pricing.
He also cautioned that interest rates may have bottomed out globally, which could limit future demand momentum in the passenger vehicle segment.
Instead, it remains more constructive on commercial vehicles, where the cycle continues to strengthen.
“The CV cycle is still going well,” he said, adding that commercial vehicle manufacturers may outperform passenger vehicle companies in the coming quarters.
Defense stocks regain investor attention
The defense sector, which has seen a meaningful correction in recent months, is once again looking attractive for long-term investors.
Maheshwari noted that many defense companies have delivered strong quarterly numbers with their share prices undergoing both timing and value corrections.
“Some of these stocks are now emerging as good bets because they have very strong order books,” he said.
Improving visibility of execution pipelines and continued government focus on defense manufacturing continue to support the sector’s long-term outlook.
Energy strategy hinges on crude stability
The energy sector remains highly sensitive to developments in the Middle East, especially with crude oil prices hovering near the $100-per-barrel mark.
Maheshwari believes that downstream energy companies could emerge as strong investment opportunities if geopolitical tensions ease as expected.
He suggested that investors gradually move away from upstream producers and instead focus on refining and marketing companies that would benefit if crude prices stabilize.
“Refining and marketing companies are the players I would play in the energy sector,” he said.
The real estate outlook becomes cautious
While real estate stocks have recovered in recent weeks, Maheshwari is cautious on the sector’s medium-term prospects.
He warned that the trajectory of global inflation could eventually push interest rates higher again, putting pressure on housing demand and credit costs.
More importantly, he flagged up structural concerns surrounding the Indian IT sector and the growing impact of artificial intelligence.
“The biggest issue is how AI will impact the IT industry,” he said, adding that the technology sector has historically been a key driver of property demand in India’s urban centres.
“If things don’t work out there, I would be really cautious about the real estate sector,” Maheshwari warned.
As markets navigate a complex mix of geopolitics, inflation risks and developed sector leadership, investors increasingly focus on quality, valuation comfort and earnings visibility rather than chasing momentum alone.
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