Indian inventory market: Specialists keep optimistic regardless of Q2 GDP shock, advocate THESE key sectors and shares to purchase

India’s gross home product (GDP) figures for the July-September quarter of the present monetary 12 months shocked many. The Q2FY25 GDP development fee was 5.4 per cent, the bottom in almost two years.

Within the corresponding quarter final 12 months, India’s GDP development was a formidable 8.1 per cent, whereas in Q1FY25, the economic system grew by 6.7 per cent. Notably, in Q2FY25, GDP development numbers have declined for the third consecutive quarter.

Nevertheless, regardless of the numbers coming beneath expectations, specialists stay optimistic concerning the Indian economic system. A few of them see encouraging indicators, akin to a revival in non-public consumption. Specialists imagine the dip in GDP development is momentary, and issues will begin enhancing by Q4FY25.

“The Q2 FY25 GDP development got here in beneath expectations, however there are a number of encouraging indicators inside the knowledge. Non-public consumption grew at a formidable 6 per cent, considerably increased than each the general GDP development fee and the two.6 per cent recorded in Q2 FY24. This dispels latest issues about weak spot in non-public consumption. Authorities consumption improved from the earlier quarter however was decrease in comparison with the identical interval final 12 months, seemingly reflecting cautious spending forward of elections,” Vikas Gupta, CEO and Chief Funding Strategist at OmniScience Capital, noticed.

Market ignores GDP shock

The Indian inventory market noticed some promoting stress within the morning commerce, however it recovered well, shrugging off issues over financial development. Indian inventory market benchmarks- the Sensex and the Nifty 50- closed with wholesome good points of over half a per cent every on Monday, December 2. The mid and smallcap segments of the BSE jumped as much as a per cent, lifting the general market capitalisation to almost ₹450 lakh crore.

After India Inc.’s weak Q2 outcomes, the market seemingly factored in a moderation in GDP development. This appears to have triggered a recent wave of shopping for following a decline within the morning session of commerce on Monday.

Specialists don’t seem nervous concerning the well being of the Indian economic system. On the present juncture, international cues, together with the Fed’s coverage resolution and President-elect Donald Trump’s strikes on tariffs and geopolitical developments, stay the important thing triggers for the market.

What ought to Indian buyers do?

For specialists, each decline within the Indian inventory market at this level is a shopping for alternative to construct long-term positions.

The financial slowdown within the second quarter was primarily as a consequence of low authorities spending as a consequence of elections and extra monsoon in some components of the nation. This might change within the second half of the fiscal as authorities capex is anticipated to see a powerful push after the Maharashtra election consequence. Furthermore, rural restoration can also collect steam, whereas fee cuts by the RBI would enhance credit score circulate within the system.

In keeping with V Ok Vijayakumar, Chief Funding Strategist at Geojit Monetary Providers, a pointy reduce available in the market could be a possibility to purchase because the home institutional buyers (DIIs) proceed to purchase throughout dips. Pharma, telecom and digital corporations are the segments which aren’t impacted by the slowdown and people could be purchased on declines.

Sneha Poddar, VP of Analysis, Wealth Administration at Motilal Oswal Monetary Providers, underscored that the latest correction within the Indian inventory market has cooled off the valuations in large-caps, whilst mid- and small-caps commerce at costly multiples. This gives a possibility so as to add choose bottom-up shares.

“Nifty-50 is now buying and selling at 19.6 instances FY26E EPS, whereas mid-cap/small-cap indices are buying and selling at 30x/23x one-year ahead P/E multiples, off from the Sep’24 highs however nonetheless wealthy versus their very own historical past in addition to relative to Nifty-50. Thus, the latest correction and the resultant moderation in valuations present a possibility so as to add choose bottom-up concepts. We advise buyers to stay chubby in direction of giant caps of their portfolio, with selective publicity in direction of mid-caps and small caps,” mentioned Poddar.

Atul Parakh, CEO of Bigul, suggests buyers ought to implement methods like diversifying their portfolios. They could additionally think about investing in a mixture of shares, bonds, gold, and property.

“Buyers have the choice to allocate funds in areas like infrastructure, monetary providers, shopper merchandise, expertise, healthcare, and renewable vitality, which can provide promising alternatives that correspond with current market traits and future development prospects primarily based on analysis underpinned by fundamentals prior to creating investments in any sectors,” mentioned Parakh.

Sectors, shares to purchase

Manish Chowdhury, the top of analysis at StoxBox, prefers large-cap banking sector shares as he believes that the valuation of those corporations is cheap and these corporations are significantly better positioned to deal with any unexpected asset high quality stress going forward.

“Our prime picks on this house embrace HDFC Financial institution, ICICI Financial institution and SBI, which provide a superb risk-reward from a one-year perspective,” mentioned Chowdhury.

Chowdhury additionally sees worth within the cement house. He expects volumes to enhance within the subsequent two quarters, backed by increased authorities spending throughout sectors akin to infrastructure and housing.

“Improved operational effectivity and any value hikes by cement corporations within the peak demand season would additional tilt scales of their favour. Ambuja Cements and Shree Cement are our most popular picks within the cement sector,” Chowdhury mentioned.

Poddar of Motilal Oswal Monetary Providers is chubby on IT, healthcare, BFSI, shopper discretionary, industrials, and actual property. Nevertheless, she is underweight on international sectors like metals and oil and fuel.

Prashanth Tapse, Senior Vice President – Analysis, Mehta Equities, the true property sector seems to be bottomed and any reduce in rates of interest by RBI may give stimulus help for the sector to carry out. The pharma sector additionally seems to be good after lengthy consolidation and is able to carry out. Buyers must also deal with the auto sector after a 15 per cent correction from the highest.

Tapse believes the auto sector will consolidate for one to 2 months on the present vary, offering a possibility to build up prime main car corporations.

Tapse additionally expects the FMCG sector to see some traction if the inflation pattern reverses. Moreover, any curiosity reduce by the central financial institution can deliver again development within the sector, feeding consumption demand.

“If we see any revival in rural and concrete demand, Hindustan Unilever (HUL) can recuperate, however at a slower tempo. Technically, HUL will consolidate within the present vary of ₹2,400-2,500 ranges earlier than making a recent transfer. The extent of ₹2,720 seems to be like sturdy resistance, and shutting above this degree, we may even see a string rally in direction of its latest excessive of ₹3,035, however it seems to be like it’s going to take three to 6 months to retest the brand new highs,” mentioned Tapse.

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Disclaimer: The views and suggestions above are these of particular person analysts, specialists, and brokerage corporations, not Mint. We advise buyers to seek the advice of licensed specialists earlier than making any funding choices.