MC Market Poll: Here's what experts believe are the biggest risks facing the Indian stock market

The latest Moneycontrol Market Poll saw participation of more than two dozen – 29 to be precise -- respondents across categories including broking firms, mutual funds, AIFs, PMS and independent experts.

The Indian stock market may well have gained ground in the recent past but there are prominent risk factors that could derail the rally that has already seen its share of volatility due to the risk factors.

When asked to list the biggest risk facing the Indian stock markets – options being earnings slowdown, high valuations, global/domestic geopolitical issues, and global tariff war – over 41 percent respondents in the latest Moneycontrol Market Poll said that global/domestic geopolitical issues is the biggest risk.

It was followed by global tariff war, earnings slowdown and high valuations.

The latest Moneycontrol Market Poll saw participation of more than two dozen – 29 to be precise -- respondents across categories including broking firms, mutual funds, AIFs, PMS and independent experts.

Also Read: MC Market Poll: Nifty likely to end CY25 between 25,000 and 27,000; maximum 10% further fall possible

The findings assume significance as Indian equities are seeing heightened volatility even as the broad outlook seems to be bullish after the recent better-than-expected rate cut by the Reserve Bank of India (RBI) and India's GDP growth rising to a four-quarter high of 7.4 percent in Q4FY25.

The findings are also in line with the view that geopolitical concerns – whether it is Russia-Ukraine, Middle East or closer home like the recent Operation Sindoor – will lead to higher volatility and uncertainty even amidst supportive global rate-cut cycle.

“Geopolitical risks that India is facing right now will continue to be a major driver of market volatility, even as the trajectory of US monetary policy will remain in focus too,” Kotak Mahindra Asset Management’s Managing Director Nilesh Shah had said at a recent media interaction.

Also Read: MC Market Poll: 62% prefer large-caps over mid/small-caps

Meanwhile, the impact of the ongoing global tariff war is clearly evident on equities globally, including in India, as developments related to the US-China talks are impacting investor sentiments almost on a daily basis.

In the context of the India-US tariff war, global financial services major Morgan Stanley had recently stated the direct impact of reciprocal tariff hikes will likely be manageable, however, the indirect impact through uncertainty weighing on business confidence would be more worrisome.

Incidentally, the US is an important trading partner for India, with 17.7 percent of India's overall exports going to America in 2024. On the flip side, India's share of US overall imports was at 2.7 percent in 2024.

Also Read: MC Market Poll: Nearly two-third experts find broader markets overvalued after sharp rally since March

On a different note, equity market analysts have cautioned over a likely subdued earnings growth for FY26 after a mixed fourth quarter of corporate results, citing weak forward earnings. Many experts are fearing that earnings downgrades may now surpass upgrades during this financial year.

Further, several leading broking firms have already cut earnings estimates for this year.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.