It's a bull market reset, requires selective stock-picking

Even after a broader market correction, valuations are not anywhere close to being reasonable Sanjay Mookim Head of India equity research at J.P. Morgan

- Abhinaba Saha

Over the past 18-20 months, identifying large-cap top performers has been challenging amid elevated expectations and lackluster earnings, according to Sanjay Mookim, head of India equity research at J.P. Morgan. Currently, only financial stocks appear attractive from a growth and valuation perspective, Mookim says, highlighting the scarcity of compelling opportunities in a market starved of earnings surprises.

The latest earnings season has done little to lift enthusiasm, with few standout results emerging. Though the market rallied briefly following the recent India-Pakistan ceasefire, Mookim expects volatility to persist, fueled by shifts in US trade policy and potential new trade deals.

With GDP growth normalizing and fiscal stimulus exhausted, Mookim describes the current phase as a "bull market reset," one requiring selective stock-picking amid ongoing uncertainty from global trade tensions and geopolitical developments.

Edited excerpts:

After a period of blockbuster economic growth and stock market returns in the last three to four years, what is your expectation for the economy and markets going forward?

For the next three odd years, we are looking at a nominal gross domestic product (GDP) growth of 9-11% for the Indian economy. While we no longer have any room for further fiscal stimuli, there is some monetary policy support from the Reserve Bank of India (RBI). Even though we anticipate an overall 100 basis point cut in rates, favorable liquidity conditions need to persist for a period of time for that to have an impact on the economy.