IT Sector: Stability Expected, Margin Watch Key
The IT sector, which has seen bouts of underperformance in recent months, may not deliver any major surprises this earnings season. According to Solanki, growth is likely to remain modest.
“Yes, definitely, as far as the results are concerned, it would be within the expected lines and the headline number would be at most 1.5% growth and the downside would be much closer to zero. So, it is a range between 0 to 1.5.”
However, beyond topline growth, the focus will be firmly on margins—particularly due to currency movements.
“However, the key thing would remain to be seen how the rupee depreciation actually plays out because from last quarter to this quarter we have seen around 2.5% to 2.6% kind of a depreciation in the rupee. So, the impact on the margins would be a key thing to be seen.”Within the sector, Solanki prefers large-cap names such as Infosys and HCL Tech, while in the midcap space, Persistent and Mphasis stand out as preferred picks.Capital Markets: Preference for Stability in AMCs
Amid fluctuating market sentiment, asset management companies (AMCs) are emerging as relatively stable plays within the capital markets ecosystem.
“Yes, we will be preferring more the asset management companies like ICICI Pru AMC because of the fact that the volatility is very low in AUM-based businesses in comparison with other companies which are more exposed to market sentiment volatility. So, AMC companies would be our first preferred pick in the overall capital market segment.”
The emphasis here is clearly on business models that offer predictability over cyclicality.
Consumption Trends: Rural Outperformance, Urban Mixed
On the consumption front, the outlook remains mixed, with a divergence between urban and rural demand trends.
“Yes, our view is neutral to cautiously positive because if you see the urban markets, they were just starting to pick up in terms of volume growth and the recent West Asia crisis has shifted the market dynamics.”
Rising cost pressures are another concern, though companies may attempt to offset this through price hikes.
“Also, the cost pressures have been rising in some pockets. Although we are hearing from our channel checks that there has been some price rise coming up over the next few weeks which companies would be taking, so it has to be seen how much they can actually pass it on.”
In contrast, rural demand continues to show resilience.
“But yes, we are more positive on the rural aspects of the market wherein rural growth is expected to remain strong.”
Stocks like Marico, Dabur, and Godrej Consumer Products are among the preferred picks, along with Mrs. Bectors Food in the midcap segment.
Infrastructure & Middle East Opportunity: A Delayed Upside
The pause in geopolitical tensions in West Asia could eventually translate into opportunities for infrastructure companies, particularly those with a strong presence in the Middle East.
“Yes, definitely, a pause and a possible ceasefire which would lead to a permanent deal would definitely be a positive outlook for the overall Middle East region.”
Solanki believes reconstruction and fresh investments could drive order inflows in the coming quarters.
“The kind of damage which has happened in a month or so would lead to a lot of new construction activity, especially in the oil and gas and infrastructure segments.”
However, the near-term outlook remains uncertain.
“Having said that, the near term would continue to remain challenging because of the heavy presence in the Middle East region and we are yet to see how much impact actually would come in the current quarter as well as in the next quarter.”
The real benefits, he suggests, may materialise two to three quarters down the line.
Aviation: Near-Term Pain, Long-Term Promise
The aviation sector continues to grapple with cost pressures and operational challenges. “Yes, again if you see, the cost pressures would continue to hurt the company in the near term.”
Restrictions and limited access to international routes are also weighing on margins. “But beyond that, three to four quarters down the line, I think things should turn positive for the company.”
While the long-term outlook remains constructive, investors may need to brace for near-term volatility.
Retail & Lifestyle: Growth Intact, But No Fresh Calls
In the retail space, companies like Titan continue to demonstrate strong fundamentals, though Solanki refrained from making fresh recommendations at current levels.
“Yes, definitely if you see from both volume as well as value, the growth is there on both fronts, plus the store additions are also very impressive for Titan.”
The company’s experimentation with lab-grown diamonds could open new growth avenues. “The recent foray into lab-grown diamonds, where the company is in the testing phase, is just testing the waters and then gradually it would be leveraging and expanding into that area, which would bode well for the company’s long-term revenue growth perspective.”
Pharma: API Players and GLP-1 Opportunity in Focus
Within pharma, the focus is shifting toward API manufacturers and emerging opportunities in the GLP-1 segment. “Right now we are more focused towards API manufacturers like Divi’s and Divi’s Lab is our preferred pick.”
Additionally, the recent patent expiry of GLP-1 drugs in India has opened new avenues. “In the midcap space we are looking out for opportunities in GLP-1, which has just been off-patented in India from March.” Stocks such as Natco Pharma, Shaily Engineering Plastics, and Emcure Pharmaceuticals are on the radar in this space.
The Bottom Line
The broader market narrative remains one of cautious optimism. While global uncertainties—from geopolitical tensions to commodity price swings—continue to cast a shadow, selective opportunities are emerging across sectors.
From stable AMC plays and resilient rural consumption to long-term infrastructure tailwinds and niche pharma opportunities, the message is clear: this is a market that rewards discernment over broad-based bets.
