Market in a phase of consolidation; 3 major domestic-centric themes to watch: Devang Mehta

The Indian stock market is currently going through a phase of consolidation after a year of volatility, but this could turn into an opportunity for long-term investors, according to Devang Mehta, Deputy Managing Director & CIO – Equity, Spark Private Wealth.

Speaking to ET Now, Mehta recalled that the markets peaked in September 2024 and have since faced corrections due to weak earnings, global geopolitical tensions, and policy uncertainties. “It has been a year of no returns,” he said. However, Mehta highlighted that recent GDP growth data surprised on the upside and that domestic investors continue to pour in money, crossing the Rs 5 lakh crore mark for the second year in a row.

GST clarity and domestic flows to support market

According to Mehta, more clarity on the new GST slabs will provide direction to businesses and investors. Meanwhile, strong domestic inflows remain a big support. “Right now, good news is not getting reflected in prices. But this is an opportunity in adversity,” he said, adding that investors with cash should consider deploying funds over the next quarter.

Key Sectors to Watch

Mehta advised investors to focus on domestic-centric stories. He highlighted three major themes:

Capex Cycle: Manufacturing, engineering, infrastructure, and allied industries will benefit from rising private and government investments.Consumption: Discretionary spending, consumer durables, automobiles, hotels, and aviation could see a revival if GST benefits are passed on.

Financials: Beyond banks, wealth managers, depositories, and stock exchanges look attractive after recent corrections.

Outlook: A Leap of Faith Needed

While near-term uncertainties such as global geopolitical risks and seasonal demand slowdown may keep markets volatile, Mehta believes investors should take a two to three-year view. “India’s domestic demand story, backed by demographics and aspirations, will eventually reflect in earnings. Markets will discount this earlier than the numbers show. The next couple of quarters should see improvement in commentary and growth,” he said.