Global risks likely to weigh on markets even as festive demand offers selective support
New Delhi, Oct 5 (IANS) Global geopolitical tensions, elevated oil prices and the prospect of further US rate hikes could keep equity positions in India under pressure in October, even as domestic festive demand could lift consumption‑linked stocks, a report said on Monday.
“Navratri, Dussehra and Durga Puja related festive consumption could spike positive sentiment for the markets domestically or at least for consumption-related stocks, including consumer staples, consumer durables and automobiles,” the report from OmniScience Capital said.
Related positive opportunities are likely for financial services companies, including banks and NBFCs which are active in consumer financing, while housing finance could also see demand spiking.
The report maintained that the September sell‑off was not India‑centric and that investors should watch the Reserve Bank of India monetary policy committee meeting, interest‑rate trajectory and liquidity conditions as key domestic triggers.
The report flagged that ongoing US-Iran war is likely to continue in October and probably even escalate further, which could keep crude oil elevated. The war could sustain US inflation concerns and raise the likelihood of further Federal Reserve hikes, supporting high bond yields and discouraging equity additions.
Investors should also consider the possibility that US-Iran reach some kind of a cease fire deal just before mid-term elections in the US which is likely to push the bond yields lower and equity markets higher across the board.
If the war intensifies significantly just before the mid-terms, the US administration may claim that its objectives have been achieved and declare a unilateral ceasefire, encouraging equity additions.
The report also noted that AI‑led earnings concentration in Taiwan and Korea drew some emerging market funds away from fairly valued Indian stocks, creating a rotation that affected foreign investor flows into India.
It suggested investors that equities should probably be slightly overweight, tactically, compared to their long-term strategic allocation framework because of markets being undervalued.
“Sectors wise, Indian banks, both PSU and private look attractive. Power companies from mid-term demand perspective driven by EVs, Railways and most importantly AI data centers, housing finance companies, infrastructure and EPC companies, and logistics and business services companies look attractive from a mid-term perspective of 3-5 years,” the report noted.
—IANS
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