1.Domestic fundamentals remain supportive despite recent market consolidation
Indian equities have seen a phase of consolidation following sharp global moves, with India underperforming several global peers in February. However, domestic macro fundamentals remain resilient, supported by improving private consumption, manufacturing momentum and continued policy support. Recent GST rationalisation and income tax relief measures are beginning to reflect in consumption indicators, providing a steady base for growth as we move into FY27.

2.Economic growth trajectory remains healthy
India reported stronger than expected GDP growth in 3QFY26, driven by manufacturing and services, with private consumption and investment holding up well despite external headwinds. Nominal GDP growth remained robust, indicating healthy underlying demand conditions. This reinforces confidence in India’s medium term earnings recovery cycle, even as near term volatility persists.

3.Global uncertainty and geopolitical risks remain near term overhangs
Global markets continue to grapple with geopolitical tensions in the Middle East, elevated crude oil volatility and ongoing uncertainty around global trade and tariffs. These factors have weighed on risk appetite and contributed to intermittent bouts of volatility.

4.Sectoral divergence likely to continue
Recent market action highlights sharp sectoral dispersion. Financials, particularly banks, continue to benefit from healthy credit growth and stable asset quality, while consumption linked sectors are gradually improving with policy support. In contrast, technology stocks have seen heightened volatility, driven by concerns around AI led disruption and near term growth visibility. This environment favours selective stock picking over broad based sector calls.
Overall, we remain positive on Indian equities over the medium to long term, and view near term market volatility as an opportunity to accumulate high quality businesses with strong balance sheets and sustainable earnings visibility.