India’s equity market is experiencing a mix of positive earnings trends and macro concerns, according to Trideep Bhattacharya, CIO of Equities at Edelweiss AMC. The latest quarterly results have finally delivered earnings upgrades after a year and a half of subdued revisions, contributing to the market’s recent buoyancy. This improvement is supported by government initiatives and a favorable macro backdrop. However, the optimism is tempered by uncertainty surrounding the India-US deal, with delays creating nervousness among investors.
The push-and-pull between positive earnings momentum and geopolitical concerns has kept the market in a balanced but cautious position. The sharp intraday weakness in the rupee has added another layer of discomfort, but Bhattacharya emphasizes that the direction of corporate earnings is the more important trend to watch. He notes that corporate earnings have finally begun turning upward, which is a positive sign for the market.
Bhattacharya also commented on the expanding universe of platform companies in the listed market, including consumer tech, food delivery, and home-services businesses. He describes their valuations as generally expensive and notes that Edelweiss AMC has adopted a more selective stance in recent months. The fund house is focusing on companies that are close to achieving profitability and have a credible roadmap to get there.
The competitive dynamics in the platform company space have become more intense, with unlisted players returning to the market and creating renewed pricing pressure. As a result, Edelweiss AMC has been more cautious in allocating capital to this segment. Bhattacharya’s assessment is that the market is navigating a complex landscape, with both positive and negative factors at play. While the earnings trends are encouraging, the macro concerns and geopolitical uncertainty are tempering the optimism.
Overall, Bhattacharya’s comments suggest that the Indian equity market is likely to remain volatile in the near term, with investors needing to be cautious and selective in their investment decisions. The fund house’s approach is to focus on companies with strong fundamentals and a clear path to profitability, while avoiding expensive valuations and intense competitive dynamics. As the market navigates this complex landscape, investors will need to stay informed and adapt to changing circumstances to make informed investment decisions.