How are you reading the markets at present, and what do the charts indicate according to you?Rohit Srivastava: This market has been experiencing a slow and steady slide. At some point, however, we should see what we call a counter-trend bounce. There are some early indications that this could happen, but we would want the market to start sustaining above 24,600 to be more confident.
Now, what would that really mean? Does it imply a runaway move to the upside like in many other parts of the world? Maybe, maybe not, because headwinds may persist for a while. The upside could reach around 25,200 in the coming weeks, but we cannot rule out pressure at higher levels again.
That said, this is all short-term. If we slightly extend our time frame to a medium- to long-term outlook, this entire phase appears to be a consolidation within a long-term correction that started in September of last year. We had significantly recovered from that point, and currently, we have pulled back around 38% of the gains made from the April low.
So, this phase represents consolidation—a waiting period before we enter the next phase of the bull market. It’s a process of shaking out weak hands, while clearly distinguishing winners and losers. Stocks that cannot deliver on growth are being beaten down, whereas those that perform well are showing outperformance even in a weak market. This creates a stock-specific approach for investors, allowing for returns over a one- to two-year horizon. Near-term conditions may remain difficult, but we do not foresee major problems in the longer term.
One very important takeaway from your answer is that this is a period of consolidation before the next phase of the bull market. That said, could you elaborate further on how much participation from the broader market you would expect in this next phase?Rohit Srivastava: As I mentioned, there is a segregation happening between winners and others. Companies that will deliver strong numbers will stand out, while those failing to adjust their outlook over the next six to twelve months will lag.However, ultimately, we expect a broad-based bull market, because that’s the nature of such markets. When we say “bull market,” it implies that multiple sectors and segments participate.What’s really needed is for valuations and other factors to correct and align with the growth potential of underlying companies. Even companies that have been expensive but shown high growth have performed well over the past one to two months.
When we enter the next leg of the bull market, we anticipate a broad-based rally again. Midcaps and smallcaps will likely outperform largecaps, as they have delivered higher earnings growth and may continue to do so in the months and years ahead. So, while portfolio shifts and individual choices matter, they will not change the overall broad-level outcome.
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