Q4 Earnings, Monsoon, Rate Cuts: What's next for Indian markets?

The stock market swung between gains and profit-booking last week, driven by Q4 earnings, global cues, and selective FII activity. What lies ahead? We spoke to Kranthi Bathini, Equity Strategist, Wealthmills Securities on sector trends, key Nifty levels, and the surge in defence stocks. What should your strategy be amid rate cut hopes and monsoon forecasts? Let’s take a look.

Excerpts:

Q. Last week, we saw a roller-coaster ride—driven by easing global tensions, profit booking, and underwhelming Q4 earnings. FIIs also played a key role. Can you break down what really happened?
Kranthi Bathini: Yes, markets remained range-bound last week, swinging between 24,750 on the downside and 25,500 on the upside. We’re at the fag end of the earnings season, and while there weren’t any big surprises, LIC did stand out. It showed a positive breakout and strong guidance—sustaining above ₹1,000 could indicate momentum.

Mid and small caps stole the limelight this week. Overall, Q4 earnings were decent—better than expected and showing year-on-year expansion. Despite geopolitical uncertainties, India’s handling of tensions has reassured global investors. FIIs are now favouring India over the US due to greater clarity and resilience.

Q. Would you say our domestic economy has shown resilience despite the geopolitical issues, including border tensions?
Kranthi: Absolutely. Domestic macros are strong—cooling inflation, early monsoons, and a growth-supportive environment. That’s why, despite subdued Q4 results, markets are holding up well.

Q. Which sectors stood out this week, and which lagged?
Kranthi: Defence is the standout. It’s riding on long-term fundamentals, not just geopolitical tensions. There's some froth due to excess investor interest, but any dip is a buying opportunity. Banking and financial services are also key picks, especially with expected rate cuts.

Selective interest is also seen in IT and infra, though IT remains uncertain.

Q. And what’s your view on banks and NBFCs?
Kranthi: Banks are doing well and remain FII favourites. They’re at the core of India’s growth story. However, IndusInd’s recent corporate governance issue is a red flag and a reminder for better governance across the sector. NBFCs face short-term headwinds from RBI norms, but should benefit from rate cuts and credit growth in the medium term.

Q. What should be the strategy for this week?
Kranthi: We’re in a “buy on dips, sell on rally” market. Investors need to use trailing stop losses and avoid getting caught in temporary euphoria. Until Nifty decisively crosses 26,000, range-bound movement will continue.

Q. What are some key triggers in the near term?
Kranthi: Monsoon progress is crucial—it directly impacts economic activity. Globally, US policy volatility adds to uncertainty, especially on tariffs and interest rates. These factors drive short-term market sentiment and are hard to predict for retail investors.

Q. What are the key Nifty levels to watch?
Kranthi: Support is at 24,750. If Nifty sustains above 25,000, we could see positive momentum. A break below 24,750 may lead to downside, but strong liquidity—thanks to FIIs, DIIs, and retail—will likely ensure pullbacks. Dips remain buying opportunities.