Markets extended their winning streak for the fourth straight week, logging gains of over 3.8% in a truncated trading week, as investor sentiment remained buoyant amid favorable macroeconomic data and steady global cues. The Nifty ended the week at 23,920.45, while the Sensex settled at 78,780.10, both closing near record highs after a steady climb through the week.
Gains were broad-based across sectors, with auto, IT, and FMCG stocks showing notable strength. Banking and financials also contributed to the rally, while mid and small-cap indices mirrored the benchmarks with weekly gains of over 4%, reflecting strong participation across the board.
Analyst Shrikant Chouhan, Head of Research - Equity at Kotak Securities, interacted with ET Markets regarding the outlook on Nifty and Bank Nifty for the upcoming week. The following are the edited excerpts from his chat:
Where do you think Nifty is headed?
Nifty and Sensex are heading upwards primarily due to favourable news flow. Macroeconomic factors, particularly the decline in US 10-year yields, the dollar index, and US equities, are encouraging foreign portfolio investors (FPIs) to invest in countries that are least affected by tariffs and have a positive impact on their domestic currencies. Additionally, FPIs are covering the short positions they have held for the past five months, which is contributing to the upward movement of the market.
On the daily chart, Nifty has certain gaps from the time when the markets were showing resilience and the index was opening with gap ups. Do you anticipate these to be filled anytime soon? Something which is looked out in technical analysis?
From my experience, the market often fails to fill initial price gaps, which we refer to as breakaway gaps. However, we do see that continuation gaps left by the market at 22923 and 23207 tend to get filled. If the Nifty falls to these levels, we can expect buying interest from those who missed out or those looking to buy on dips.
Bank Nifty is definitely better than Nifty right now. Everyone is bullish on banks. What are your inputs on this? Where do you see it heading, and what are the triggers behind this?
Banking stocks have been witnessing renewed investor interest and a strong upward momentum, driven by multiple supportive factors. The sector is currently well-positioned, with asset quality at leading banks faring better than expected. Additionally, the RBI’s supportive stance on system liquidity is aiding the momentum. The domestic-centric lending model of Indian banks also provides resilience in the face of global trade uncertainties.
Valuations remain attractive, adding further tailwinds to the rally. Early warning indicators suggest that the stress in the microfinance segment is easing, which is boosting confidence around overall asset quality. Moreover, top banks, which traditionally have high FII ownership, had seen significant pressure during periods of foreign outflows. With FII inflows now returning, these banks are also seeing renewed support. All these factors together are driving the recent surge in the banking index.
An additional tailwind is the recent fall in bond yields, driven by controlled inflation and the beginning of a rate cut cycle. This trend is expected to boost treasury gains for banks, further strengthening their earnings outlook. All these factors collectively are driving the strong rally in the banking index.
What's your view on HDFC Bank and ICICI Bank?
The banking sector remains relatively well-positioned. Asset quality of leading banks are performing better than feared, RBI-supported system liquidity is a positive, and the sector’s domestic-focused lending model offers resilience amid global trade tensions. Combined with attractive valuations, these factors could help cushion near-term volatility and present strong long-term investment opportunities. Within the Banks, at this juncture, those who would be able to garner deposits well and keep its asset quality under control are the ones we prefer. We thus like HDFC Bank and ICICI Bank.
Is any strategy recommended to trade either index profitably?
The markets are highly volatile due to uncertain news flow, which is why we are recommending a bull call spread with limited risk.
What is the sense that the FII activity is giving right now?
Interestingly, during the last few days, we have seen FIIs returning to the Indian equity cash market. We remain positive on the flows in the medium to long-term but do expect them to be volatile.
Earnings have started, and 2 IT majors have reported their results- TCS and Wipro. What do you infer from these and how are these stocks placed?
TCS’ Q4FY25 financial performance was muted, with weak headline numbers and lower than expected margin. On the flip side, healthy TCV provides some growth visibility in FY26. Overall, TCV grew by 19.6% qoq to US$12.2 bn. We believe that the TCV numbers reflect TCS’s strong positioning in cost take-out deals and provide some visibility toward growth recovery in developed markets in FY26. International business will deliver better revenue growth in FY26 compared with FY25. Once the uncertainty settles, there will be opportunities to replenish revenues lost from competition with the BSNL engagement as well.
TCS expects higher demand uncertainty in Q1FY26 compared with the prior period last year, but expects the uncertainty to be short-lived based on client conversations.
What about the IT sector? Investors are keenly looking forward to Q4 earnings. Do you have any views on the sector based on the earnings so far? Or are the charts trying to tell us something?
Indian IT Services is generally a story of the first half of the fiscal year, as it is a seasonally strong period for IT services.
The imposition of tariffs by Trump has led to heightened macro uncertainty and geopolitical tensions and risks slowing down global economic growth. We believe that higher uncertainty and growth slowdown are not conducive to IT services demand. Clients under distress will look to pass on the pain to vendors, leading to an impact on IT service players in terms of demand or pricing.
Is there anything specific that you expect from the Q4 earnings season?
Generally, Q4 is a very important quarter as the management shares guidance for the next full year.
Amid any uncertainties, the FMCG sector emerges as a safe pocket. Your thoughts? And any specific stocks that offer safe positioning for the participants?
The ongoing weakness in urban consumption is likely to continue to weigh on the value/volume growth of FMCG players in Q4FY25E and H1FY26E. Rural growth is stable, but not accelerating. Inflation in a few commodities (palm oil, tea, and coffee) is likely to drag margin delivery for a quarter or two. We assume continued weakness in consumption in H1FY26E and trim EPS estimates (in the range of 0-4%) and fair values across the board. GCPL remains our preferred pick in the FMCG space—pick-up in HI performance (expected in Q4) and normalization of soaps' profitability (led by price hikes or eventual easing of palm oil prices) should drive the stock price higher.
Do you see any stocks that may be beneficiaries of rising gold prices?
The Gold loan NBFCs and the banks with a higher Gold loan share tend to benefit from the higher prices in gold as they can give more loans on the same quantity of gold, thus aiding in their AUM growth and also margins.
Can you help us know if there are any other sectors that you might be looking at?
We will focus on Banking, NBFC, Telecom, Healthcare, Metals & Mining, and Hotels.
Any stocks within those sectors?
We have buy ratings on Shriram Finance, Chola Finance, SBIN, ICICI BANK, HDFC BANK, Bharti Airtel, RIL, NH, JSPL, HINDALCO and Indian Hotels.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Gains were broad-based across sectors, with auto, IT, and FMCG stocks showing notable strength. Banking and financials also contributed to the rally, while mid and small-cap indices mirrored the benchmarks with weekly gains of over 4%, reflecting strong participation across the board.
Analyst Shrikant Chouhan, Head of Research - Equity at Kotak Securities, interacted with ET Markets regarding the outlook on Nifty and Bank Nifty for the upcoming week. The following are the edited excerpts from his chat:
Where do you think Nifty is headed?
Nifty and Sensex are heading upwards primarily due to favourable news flow. Macroeconomic factors, particularly the decline in US 10-year yields, the dollar index, and US equities, are encouraging foreign portfolio investors (FPIs) to invest in countries that are least affected by tariffs and have a positive impact on their domestic currencies. Additionally, FPIs are covering the short positions they have held for the past five months, which is contributing to the upward movement of the market.
On the daily chart, Nifty has certain gaps from the time when the markets were showing resilience and the index was opening with gap ups. Do you anticipate these to be filled anytime soon? Something which is looked out in technical analysis?
From my experience, the market often fails to fill initial price gaps, which we refer to as breakaway gaps. However, we do see that continuation gaps left by the market at 22923 and 23207 tend to get filled. If the Nifty falls to these levels, we can expect buying interest from those who missed out or those looking to buy on dips.
Bank Nifty is definitely better than Nifty right now. Everyone is bullish on banks. What are your inputs on this? Where do you see it heading, and what are the triggers behind this?
Banking stocks have been witnessing renewed investor interest and a strong upward momentum, driven by multiple supportive factors. The sector is currently well-positioned, with asset quality at leading banks faring better than expected. Additionally, the RBI’s supportive stance on system liquidity is aiding the momentum. The domestic-centric lending model of Indian banks also provides resilience in the face of global trade uncertainties.
Valuations remain attractive, adding further tailwinds to the rally. Early warning indicators suggest that the stress in the microfinance segment is easing, which is boosting confidence around overall asset quality. Moreover, top banks, which traditionally have high FII ownership, had seen significant pressure during periods of foreign outflows. With FII inflows now returning, these banks are also seeing renewed support. All these factors together are driving the recent surge in the banking index.
An additional tailwind is the recent fall in bond yields, driven by controlled inflation and the beginning of a rate cut cycle. This trend is expected to boost treasury gains for banks, further strengthening their earnings outlook. All these factors collectively are driving the strong rally in the banking index.
What's your view on HDFC Bank and ICICI Bank?
The banking sector remains relatively well-positioned. Asset quality of leading banks are performing better than feared, RBI-supported system liquidity is a positive, and the sector’s domestic-focused lending model offers resilience amid global trade tensions. Combined with attractive valuations, these factors could help cushion near-term volatility and present strong long-term investment opportunities. Within the Banks, at this juncture, those who would be able to garner deposits well and keep its asset quality under control are the ones we prefer. We thus like HDFC Bank and ICICI Bank.
Is any strategy recommended to trade either index profitably?
The markets are highly volatile due to uncertain news flow, which is why we are recommending a bull call spread with limited risk.
What is the sense that the FII activity is giving right now?
Interestingly, during the last few days, we have seen FIIs returning to the Indian equity cash market. We remain positive on the flows in the medium to long-term but do expect them to be volatile.
Earnings have started, and 2 IT majors have reported their results- TCS and Wipro. What do you infer from these and how are these stocks placed?
TCS’ Q4FY25 financial performance was muted, with weak headline numbers and lower than expected margin. On the flip side, healthy TCV provides some growth visibility in FY26. Overall, TCV grew by 19.6% qoq to US$12.2 bn. We believe that the TCV numbers reflect TCS’s strong positioning in cost take-out deals and provide some visibility toward growth recovery in developed markets in FY26. International business will deliver better revenue growth in FY26 compared with FY25. Once the uncertainty settles, there will be opportunities to replenish revenues lost from competition with the BSNL engagement as well.
TCS expects higher demand uncertainty in Q1FY26 compared with the prior period last year, but expects the uncertainty to be short-lived based on client conversations.
What about the IT sector? Investors are keenly looking forward to Q4 earnings. Do you have any views on the sector based on the earnings so far? Or are the charts trying to tell us something?
Indian IT Services is generally a story of the first half of the fiscal year, as it is a seasonally strong period for IT services.
The imposition of tariffs by Trump has led to heightened macro uncertainty and geopolitical tensions and risks slowing down global economic growth. We believe that higher uncertainty and growth slowdown are not conducive to IT services demand. Clients under distress will look to pass on the pain to vendors, leading to an impact on IT service players in terms of demand or pricing.
Is there anything specific that you expect from the Q4 earnings season?
Generally, Q4 is a very important quarter as the management shares guidance for the next full year.
Amid any uncertainties, the FMCG sector emerges as a safe pocket. Your thoughts? And any specific stocks that offer safe positioning for the participants?
The ongoing weakness in urban consumption is likely to continue to weigh on the value/volume growth of FMCG players in Q4FY25E and H1FY26E. Rural growth is stable, but not accelerating. Inflation in a few commodities (palm oil, tea, and coffee) is likely to drag margin delivery for a quarter or two. We assume continued weakness in consumption in H1FY26E and trim EPS estimates (in the range of 0-4%) and fair values across the board. GCPL remains our preferred pick in the FMCG space—pick-up in HI performance (expected in Q4) and normalization of soaps' profitability (led by price hikes or eventual easing of palm oil prices) should drive the stock price higher.
Do you see any stocks that may be beneficiaries of rising gold prices?
The Gold loan NBFCs and the banks with a higher Gold loan share tend to benefit from the higher prices in gold as they can give more loans on the same quantity of gold, thus aiding in their AUM growth and also margins.
Can you help us know if there are any other sectors that you might be looking at?
We will focus on Banking, NBFC, Telecom, Healthcare, Metals & Mining, and Hotels.
Any stocks within those sectors?
We have buy ratings on Shriram Finance, Chola Finance, SBIN, ICICI BANK, HDFC BANK, Bharti Airtel, RIL, NH, JSPL, HINDALCO and Indian Hotels.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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