Sideways trend could continue for several months, says SBI MF’s Singh

This phase, where the Indian stock market mostly moves sideways without any significant swings, could continue for several months, says D. P. Singh, deputy managing director and joint chief executive officer, SBI Mutual Fund, which oversees more than ₹12 trillion in assets, including about ₹9.15 trillion in equities as of 30 September.

- Dipti Sharma [e-mail]

He said that it is difficult to predict the momentum of Indian equities for the rest of the fiscal year because there are numerous critical factors and uncertainties, including geopolitical setbacks.

"If there's a reason for concern that results in better valuations, I see it as an opportunity to deploy more capital into the markets." Edited excerpts:

We think Indian equity markets have a long runway ahead just from the perspective of potential economic growth, demographics and the ability to move per capita income higher. From a shortterm perspective, we have seen headwinds emerge on the external front with tariffs and visa fee hikes. This is not yet fully reflected in the company's earnings. However, the heartening aspect is that the government is now taking stronger steps to boost domestic growth, which can act as an effective offset. In terms of further headwinds, valuations have been on the higher side for Indian equities in the past, but even that is now getting normalized, particularly for large-cap stocks. Foreign institutional investors (FIIs) have been significant sellers of Indian equities over the past 12 months, but their positioning now has become very light and is unlikely to be a big headwind going forward.

Earlier, markets saw kneejerk reactions as holding patterns were limited. Now, with a broad-based holding structure dominated by domestic institutional investors (DIIs)- essentially pooled individual money-panic selling is rare. Unlike individual investors, institutions make decisions after thorough due diligence, with a long-term view of value creation, so they don't dump stocks on short-term news.