One-day buzz or building momentum? Birla Sun Life's A Balasubramanian decodes the market post-Maha win

A Balasubramanian, Managing Director of Aditya Birla Sun Life Asset Management

Indian equities are set for a short-covering rally, but the market's trajectory for the remainder of the year is likely to trend upward, said A Balasubramanian, Managing Director of Aditya Birla Sun Life Asset Management in an exclusive conversation with Moneycontrol.

"While today may see a one-day trade rally, the broader market is expected to consolidate and gradually rise as foreign investor activity slows during the December holiday season," Balasubramanian said. He expects domestic institutional buying to lend steady support to prices, even as the market temporarily shifts focus away from rising Treasury yields and geopolitical concerns.

Investors are also waiting to assess policy direction under the incoming Trump administration. "If the Trump government pushes for interest rate cuts, the Federal Reserve may adopt a more cautious approach initially, which could provide a tailwind for markets," he noted.

On the domestic front, Balasubramanian sees the BJP's landslide victory in Maharashtra as a key political and economic inflection point. "The result strengthens confidence in the government's ability to drive its economic agenda, particularly capex, which could now gain renewed momentum," he said.

However, consumption remains a concern amid a visible slowdown in demand, attributed to tighter retail credit conditions as the Reserve Bank maintains a stringent stance on unsecured lending. "While capex is set to rebound, the pace of consumption recovery will be a space to watch," Balasubramanian said.

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