Buy on dip or wait? Motilal’s Sneha Poddar breaks down H2 2025 market opportunities

ET Markets sat down with Sneha Poddar, VP-Research, Wealth Management at Motilal Oswal Financial Services, to discuss what’s driving the markets, the sustainability of valuations, sectoral opportunities, and risks for investors as we move into H2 2025.

Excerpts:

Q. What is driving the Indian stock market right now? Is it the global cues, earnings, liquidity, or a mix of factors?
Sneha: Global cues are central, but India’s domestic factors, including macro recovery and government reforms, are providing resilience. While global issues cap the upside, fiscal and monetary measures are strengthening the economy and creating optimism for the next year. Q2 earnings are expected to be muted, but recovery is already factored in by investors.

Q. How sustainable are current market valuations?
Sneha: Large-cap valuations are reasonable, Nifty trades around 20x FY26 earnings, in line with its 10-year average. Mid- and small-caps are at a premium, so selective investing is key. Compared to global markets, Indian equities have stayed resilient, leaving room for upward movement.

Q. What are the early takeaways from Q2 results?
Sneha: Q2 is expected to be soft but slightly better than Q1, marking the start of recovery toward FY27. Earnings cuts are slowing, and management commentary post-GST reforms will be crucial. Early tech results from Persistent Systems, Tech Mahindra, and HCL Tech have exceeded expectations, indicating gradual improvement.

Q. How important are FII flows compared to domestic fundamentals?
Sneha: FIIs are still relevant, but domestic investors, both retail and institutional, have kept markets resilient despite global headwinds. Mutual fund inflows and SIP contributions have reduced reliance on FIIs. Gradual FII inflows are expected next year as domestic recovery strengthens confidence.Q. What global risks could affect Indian markets?
Sneha: The main near-term risk is India–US trade tensions. Sector-specific tariffs could impact markets. If trade talks conclude by November–December, markets could see upward movement; if delayed, consolidation may continue.Q: Which sectors look strong for H2 2025?
Sneha: Sure, there are many sectors such as –

• BFSI: Attractive valuations, improved credit flow, and lower borrowing costs will support margins.
• Capital Markets: Recovery in volumes post-regulatory clarity could drive growth.
• Consumption: GST rationalization, festive demand, and healthy rural income support this space.
• Industrials: Capex revival post-monsoon may boost profitability.

Q. Which sectors should investors be cautious about?
Sneha:

• IT: Strong Q2 results, but headwinds remain; near-term caution advised.
• Oil & Gas: Volatility and geopolitical risks make it less attractive short-term.

Q. What approach should long-term investors take in this market?
Sneha: It’s a buy-on-dip market. Government reforms and upcoming earnings recovery make this favorable for long-term investors. Large-cap valuations are comfortable; selective stock picking in themes like EMS, defense, healthcare (hospitals), and BFSI can add value. FY27 earnings could see 15–16% growth, which should support market momentum.

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