Indian markets likely to turn increasingly earnings-driven amid global risks: Report

The assessment comes after Indian equities faced significant pressure in September, with the Nifty 50 declining 6.1 per cent amid escalating geopolitical tensions, elevated crude oil prices, rising global bond yields and foreign investor selling.

The Nifty Midcap 150 and Nifty Smallcap 250 indices fell approximately 7.1 per cent and 3.1 per cent, respectively, during the month. Foreign portfolio investors withdrew around USD 4.1 billion from Indian equities in the secondary market, while domestic institutional investors purchased approximately USD 8 billion, cushioning the impact of overseas selling.

Against this backdrop, the asset manager said businesses generating stronger near-term cash flows could be better positioned than those dependent on earnings far into the future, as higher discount rates could weigh on valuations. Companies carrying excessive debt could also face greater balance-sheet risks as funding costs rise.

The report indicated that portfolios could benefit from a tilt towards value-oriented businesses with strong cash generation, prudent capital structures and durable balance sheets.

Meanwhile, India’s investment outlook showed some positive signs. New project announcements rose around 29 per cent year-on-year to Rs 14.6 trillion in the first quarter of FY27, largely driven by private-sector investments, even as government project announcements declined.

The report noted the renewed escalation in West Asia, monsoon-linked inflation outcomes and the Reserve Bank of India’s policy decisions would remain key factors to watch. It added that companies with sustainable earnings visibility and strong execution capabilities would be critical to market performance as investors increasingly focus on fundamentals. (ANI)

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