Markets still digesting West Asia shock; domestic sectors offer relative comfort, says Dharmesh Kant

Market analysts remain cautious as they assess the ongoing impact of geopolitical tensions in West Asia on Indian equities. Despite a slight recovery in the markets, experts, including Dharmesh Kant from Cholamandalam Securities, emphasize that the underlying pressure on stocks predates the recent crisis. He indicates that the market was already experiencing selling trends amid fears regarding future earnings, which he believes are insufficient to justify high price-to-earnings ratios. Kant asserts that the geopolitical situation has exacerbated an existing market correction, suggesting that the volatility may persist as tensions in the region could prolong. He warns of potential supply-driven inflation impacts, adding uncertainty to global markets. Consequently, Kant advocates for a cautious investment strategy, focusing selectively on sectors that could benefit from domestic economic growth, such as banking, infrastructure, building materials, metals, and automobiles. He maintains a positive long-term perspective on the defense sector, despite its recent performance not meeting expectations. Overall, investors are advised to remain vigilant and observe market developments closely as global dynamics continue to evolve.