Waiting for a Breakout: Markets Tread Water Amid Uncertainty
Ambareesh Baliga in an interview to ET Now said that the market is currently in a phase of consolidation. He doesn’t see much downside risk in the near term and expects the Nifty to hold the 24,800 level. He believes the index may move within a broad range of 24,800 to 26,200, which could be achieved once the tariff agreement between India and the US is finalized.
While the ongoing earnings season has been disappointing so far, Baliga points out that this isn’t a major concern because analyst expectations were already low going in. This cushion of low expectations is helping markets stay resilient despite the weaker results that have been reported recently.
Baliga expects positive surprises in a few select sectors this earnings season. He sees potential upside in the BFSI space, particularly among banking stocks. Additionally, he believes the recent tax cuts announced in the Union Budget will reflect positively in the Q1 results of FMCG and consumer durables companies. Specialty chemical stocks may also outperform due to increased demand and scale advantages.
The IT sector remains under pressure following weak results from TCS and HCL Tech. Baliga advises a cautious approach here. Rather than rushing to buy now, he suggests investors wait for signs of recovery or “green shoots,” even if that means entering 5–8% higher. It’s better to wait for visible improvement than to buy during uncertainty.
Despite ongoing concerns about US tariffs on Indian pharmaceutical products, Baliga remains optimistic about the sector. He believes the US administration may talk about tariffs, but implementation would be difficult due to domestic backlash over rising healthcare costs. He sees value in large US-exposed pharma players like Sun Pharma and Dr Reddy’s.
India's specialty chemicals sector is benefiting from the China+1 strategy. According to Baliga, Indian companies have used the past four years to build scale and now rank among the top global manufacturers in niche segments. He highlights Deepak Nitrite, Vinati Organics, and SRF as top picks within the space due to their growth potential and specialization.
In the real estate sector, Baliga feels that the premium housing market is nearing saturation, with rising inventory levels indicating demand fatigue. Instead, he sees better prospects in the affordable housing segment. Falling interest rates and expected rate cuts by the RBI will act as catalysts for this segment. He suggests looking at companies like Sobha, Puravankara, and Arihant Superstructures.
When comparing food delivery platforms, Baliga prefers Eternal (formerly Zomato) over Swiggy. He appreciates Eternal’s aggressive approach to growth and believes its margins will improve over the next 4–8 quarters. While the stock has been trading in a tight range, he expects a positive breakout soon based on strong consumer adoption trends.
Within the BFSI sector, Baliga prefers pure-play banks—especially PSU and large private sector banks. He expects credit growth to gradually resume over the next 2–3 quarters. However, he remains cautious on NBFCs, particularly those exposed to retail lending, due to concerns about asset quality and demand.
Railway and defence stocks have surged on the back of order wins and positive sentiment. However, Baliga warns that valuations are becoming stretched. While these sectors are attractive over a 4–5 year horizon, execution challenges pose a risk in the medium term. Companies need to scale up their capacity to deliver on large order books, which is not being adequately discussed in the current market euphoria.
