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Equity and Bond markets way forward 




Equity and Bond markets way forward 

India’s nominal growth has slowed meaningfully over the past decade. Almost every major drivercorporate sales, wages, tax revenues, consumption, exports has decelerated. Private capex is still not picking up in a meaningful way, while consumption remains soft due to slower income growth and higher household debt. Exports, especially services, have also lost momentum compared to the strong pre-2013 phase.


Market behaviour is also flashing caution. Breadth has weakened sharply, with very few stocks hitting new highs despite the indices being near peak levels. Small and mid caps have started slipping below key trend indicators, while large caps are quietly beginning to lead again. Promoter selling and record IPO fundraising also point towards a late-cycle environment.


On the other side, bonds look attractive. With inflation at multi-decade lows and government borrowing stabilising, long-duration G-Secs around 6.55–6.65 percent offer both carry and potential capital gains. The risk-reward is favourable.


IT is another interesting pocket. The sector is under-owned, has corrected meaningfully and valuations are now near long-term averages. It may not be an absolute buy yet, but it is turning into a relative opportunity, especially compared to the over-owned US tech names.


Putting all this together, the message is clear: stay conservative,, tilt towards large caps, and increase duration on the debt side. Selective IT can act as a stabiliser in this phase. And as we’ve discussed earlier, continue your SIP in gold and silver as a hedge against global uncertainty and stretched equity valuations.

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