Financials in a Sweet Spot, Defence Remains a Structural Bet

Market expert Dharmesh Kant of Cholamandalam Securities predicts that financial stocks are poised to lead India's next market rally phase. While a relief rally is expected through June and July, Kant suggests that long-term structural growth remains concentrated in specific sectors like defence and healthcare.

Financials: The Prime Drivers of Market Momentum

According to Kant, the banking and financial services sector is currently in a "sweet spot." Unlike previous cycles, financial institutions are better insulated due to improving Net Interest Margins (NIMs), robust credit growth, and healthy loan demand. Interestingly, Kant notes that even a potential interest rate hike could prove beneficial for these institutions.

The recovery in microfinance lending and lower funding costs are further strengthening the sector's outlook. Furthermore, government support mechanisms are expected to act as a buffer, preventing any significant deterioration in asset quality even if the broader economy faces headwinds.

Defence and Healthcare: Structural Growth and Safe Havens

While the broader market remains sensitive to variables like the monsoon, Kant identifies defence and healthcare as sectors that are largely insulated from economic volatility.

The defence sector, in particular, is viewed as a "structural play" driven by massive order inflows and the push for indigenisation. Kant estimates a potential upside of 40% to 50% over the next two to three years for select players. He specifically highlighted:

In the healthcare space, Kant remains bullish across the entire spectrum, including hospital chains, diagnostics, and pharmacy businesses.

Sectors to Avoid: The Risks in Oil and Consumption

Walaupun harga minyak mentah jatuh, Kant menasihatkan agar tidak melabur dalam pengeluar dan penapis minyak (OMC), dengan melabelkan industri tersebut sebagai "sektor senja" yang mempunyai permintaan jangka panjang yang semakin lemah. Beliau memberi amaran tentang kemungkinan penurunan lanjut harga minyak mentah jika eksport minyak Iran kembali ke pasaran global dengan lebih bebas.

Begitu juga, beliau mencadangkan agar kekal di tepi berhubung perniagaan berorientasikan penggunaan dan logam disebabkan kurangnya kejelasan. Walaupun harga minyak yang lebih rendah mungkin memberi manfaat kepada beberapa sektor, Kant lebih mengutamakan pengeluar tayar berbanding syarikat cat. Beliau menyatakan bahawa walaupun saham cat kekal dengan penilaian yang tinggi, syarikat tayar bakal mendapat manfaat daripada harga getah yang stabil dan permintaan automotif yang konsisten.

Pemboleh Ubah Monsun

Satu peringatan kritikal terhadap optimisme jangka pendek adalah monsun India. Walaupun "kenaikan sementara" (breather rally) dijangkakan pada bulan Jun dan Julai, trajektori pasaran pada separuh kedua tahun ini akan sangat bergantung pada corak taburan hujan, yang pada masa ini kelihatan "lebih menakutkan" menurut trend terkini.

Ringkasan Utama