Market direction depends on earnings recovery, festive season, GST cuts to boost consumption: Dipan Mehta

Indian stock markets continue to swing between optimism and caution, with strong starts often followed by weak closes, and vice versa. According to Dipan Mehta, Director at Elixir Equities, retail investor liquidity is providing support, but earnings growth remains the missing link for a sustained upward move.

“Flows from mutual funds and retail investors are absorbing supply from IPOs and promoter selling. That’s keeping markets from falling. But on the upside, professional investors are waiting for either a correction or visible earnings revival before returning,” Mehta told ET Now.

Despite tax cuts, rate cuts, and now GST cuts, corporate earnings have slowed for several quarters. “At some point, we should see a revival in earnings, and that could be the trigger for markets to move higher. Until then, we may remain range-bound,” he added.

Consumption boost expected

Mehta is optimistic about consumption trends as the festive season begins. “This season has kicked off well and should translate into stronger earnings for several companies,” he said.

Capex outlook remains strong

On concerns that government spending on capital expenditure may slow, Mehta disagreed. “I don’t see evidence that capex is being cut. In fact, defence players are getting more orders, and new infrastructure projects are being announced regularly,” he said.He also expects private sector investments to accelerate, countering fears of a slowdown.

The road ahead

Market direction, Mehta believes, will depend on earnings recovery. “If consumption improves as expected, festive demand could provide the much-needed boost. But until earnings growth picks up, markets may stay within this range,” he said.

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