Divam Sharma, Co-Founder and Fund Manager at Green Portfolio PMS believes there’s a clear sense of momentum in the markets right now, supported by steady domestic inflows and strong participation from smart money.
According to him, any constructive developments around the trade negotiations could act as a further catalyst to push indices to new highs in November.
After reading September quarter earnings, he believes the December quarter (Q3) should serve as a turning point, supported by improving domestic demand, festive-season tailwinds, and a pickup in investment activity. By the March quarter (Q4), he anticipates a more meaningful improvement in both earnings momentum and topline growth.
What are your expectations from the Asian Summit, as the Presidents of two major economies are set to meet on October 30?
Fingers crossed. Hopefully, the summit delivers some credible signals of de-escalation. While we shouldn’t expect this to mark the end point of the negotiations, it can certainly set the direction for constructive dialogue ahead. The markets are looking for a clear roadmap towards certainty and stability, which have been lacking for some time.
The ongoing tensions between the two major economies have had widespread ripple effects influencing global trade flows, commodity prices, and indirectly impacting the Indian economy as well. A stable geopolitical environment would not only calm global risk sentiment but could also pave the way for a renewed and aggressive positioning of FII capital towards developing markets like India, which continue to stand out as resilient and high-growth opportunities in the current global landscape.
Do you expect the markets to reach new highs in November?
There’s a clear sense of momentum in the markets right now, supported by steady domestic inflows and strong participation from smart money. The underlying sentiment remains positive, and any constructive developments around the trade negotiations could act as a further catalyst to push indices to new highs in November.
At the same time, the ongoing result season will play a crucial role in shaping near-term direction. Strong corporate earnings, particularly from sectors linked to consumption and financials, could reinforce investor confidence. Overall, we remain optimistic about the market’s trajectory in November, expecting a healthy mix of momentum and selective sectoral strength to drive performance.
So far, has the September-quarter earnings season been broadly in line with expectations, with no major surprises?
Broadly, the September-quarter earnings season has been in line with expectations, with no major negative surprises. Financials continue to stand out as one of the better-positioned sectors for growth, supported by healthy credit momentum and resilient asset quality. We expect system-level credit expansion in the 11–15 percent range, aided by supportive factors such as the impact of GST reforms, a good monsoon, and recent tax measures that are likely to revive consumption and spur private capex.
Corporate lending activity should also gather pace in the second half of the year as rising yields make bond and CP markets relatively less attractive, prompting borrowers to return to the banking system. With ample liquidity, steady deposit growth particularly in the retail and MSME segments and reasonable valuations, the financial sector continues to offer cyclical upside. The overall setup suggests an earnings recovery led by improving credit demand and better operating leverage across most large banks.
Do you expect December-quarter earnings to show a significant improvement?
Markets are currently in a phase of consolidation amid heightened global uncertainty, with sentiment shifting quickly in response to every development around the US trade negotiations. Despite this, the second-quarter results have broadly met expectations, with no material surprises across our portfolio names, including companies like HFCL.
Looking ahead, we expect the second half of the fiscal year to move progressively in our favour. The December quarter (Q3) should serve as a turning point, supported by improving domestic demand, festive-season tailwinds, and a pickup in investment activity. By the March quarter (Q4), we anticipate a more meaningful improvement in both earnings momentum and topline growth as operating leverage kicks in and global conditions begin to stabilise. Overall, we see the earnings trajectory strengthening steadily through H2.
Are financial stocks poised for growth, supported by GST-driven consumption and attractive valuations? Do you anticipate strong credit growth in the range of 13–15 percent soon?
Yes, we believe financial stocks remain well-positioned for growth, supported by a steady revival in consumption following GST-driven formalisation and the sector’s still-attractive valuations. As mentioned earlier, we expect Q3 to serve as a strong starting point, setting the tone for a broader and more sustainable recovery through Q4. With improving macro clarity and strengthening domestic demand, earnings momentum in financials should continue to accelerate.
The outcome of the US trade discussions will remain an important global variable, but domestically, the combination of healthy EPS growth across our portfolio companies and a visible revival in both public and private capex should act as key performance catalysts. We continue to expect robust credit expansion in the 13–15 percent range, led by renewed corporate borrowing, retail credit resilience, and improving MSME activity.
For us, December marks only the beginning of the next growth phase. We are positioning for a cycle driven by policy stability, rising investment momentum, and broad-based earnings expansion factors that together should translate into solid performance for financial stocks and portfolios alike.
Do export-oriented sectors, such as auto components, look attractive from a medium- to long-term perspective?
In the medium term, we maintain a cautious outlook on export-oriented sectors such as auto components, primarily because the US- a key export destination continues to face macroeconomic and trade-related uncertainties that could temporarily weigh on order flows and capacity utilisation.
That said, valuations in the space have turned favourable, creating opportunities for selective accumulation, particularly in companies with strong balance sheets, diversified customer bases, and high value-added product portfolios. Any easing of global headwinds or improvement in trade sentiment could act as a catalyst for these names.
From a long-term perspective, however, the structural story for Indian auto component manufacturers remains compelling. Global supply-chain diversification, India’s rising cost competitiveness, and the ongoing localisation efforts by global OEMs are strong secular drivers. Together, these factors reinforce India’s positioning as an increasingly strategic sourcing hub, offering attractive growth potential over a multi-year horizon.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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