Segments driven by domestic consumption, infrastructure, and retail, together with good-quality large-cap stocks and well-researched mid- and small-cap investment options, are likely to present good opportunities for investors, a report published on Wednesday stated.
In its assessment, asset manager PL Wealth was optimistic in the long term for Indian equities but suggested caution in the near term, due to risk aversion from tariff uncertainties and possible foreign portfolio investor outflows.
The report identified India's resilient domestic fundamentals as one of the key drivers of this optimistic outlook. India's economic growth is sound, with Q1 FY26 gross domestic product growing 7.8 per cent year-on-year (YoY) led by sped-up government capital expenditure and a benign deflator, the firm added.
PL Wealth also mentioned that the continuing GST rationalisation is set to raise growth by 0.2–0.3 per cent, support consumption, and ease inflationary pressures.
Consumer price index (CPI) inflation dropped to 97-month low of 1.55 per cent in July, providing space for probable rate reductions. Meanwhile, the services sector also continues to be robust with the Services PMI hitting its 15-year high at 62.9 in August, the report further said.
For the short term (1-3 months), PL Wealth recommends focusing on large-cap exposure while employing staggered entries to manage timing risks. Over the medium term, should volatility ease, the firm expects opportunities to arise in mid- and small-cap stocks as well as in domestic demand-driven sectors, including consumption, infrastructure, and retail.
“Disciplined, long-term investors should use volatility to build exposure to quality companies, while fixed income and precious metals provide tactical opportunities in the current environment,” said Inderbir Singh Jolly, CEO, PL Wealth.
As far as currency is concerned, PL Wealth sees the rupee trading between 87.5 and 88.5 in the near term and stabilizing at 86 to 88 in the medium term. The report warned that additional tariff hikes can drive the currency towards 90/USD.
