“Geopolitical developments will be influencing the market trend this week more than other factors. The market will be focussed on the outcome of the Trump-Putin talks in Alaska. If the talks result in an end to the Russia-Ukraine war, that would be a major positive development. US sanctions on Russia may be withdrawn and consequently the penal tariff of 25% imposed on India for buying oil from Russia also may be reconsidered. If this happens the oversold market will stage a smart rebound. Investors will have to wait and watch for the developments.
India has been underperforming other markets significantly in the last six weeks. Nifty is down 7.6% from the September 2024 record high. Even though a sharp short-covering rally may happen on positive news, sustained rally will happen only fundamental support on the earnings front. This can happen from Q3 onwards. Now, safety is in fairly-valued largecaps.”
