By:-Rahul Singh, CIO – Equities, Tata Asset Management,
“Geopolitical tensions continue to keep crude oil prices elevated, while mixed global signals have resulted in bond yields remaining high and the rupee staying under pressure. This has increased the risk premium on Indian equities and weighed on market valuations. Despite these challenges, the impact on corporate earnings has been manageable so far, and management commentary during the fourth-quarter earnings season has remained encouraging. In the current environment, we are focusing on sectors that are relatively better insulated from these uncertainties and continue to benefit from tailwinds, including power, resources, energy, pharma, healthcare and consumer-focused businesses. While a weaker rupee provides some support to IT services and valuations in BFSI appear reasonable, we remain mindful of risks such as higher commodity prices and their potential impact on margins in certain growth-oriented sectors.”