According to Vikas Gupta, CEO and Chief Investment Strategist at OmniScience Capital, agricultural production is likely to be affected by El Nino, which could weaken the purchasing power of the rural population. This, in turn, could weigh on rural-focused sectors such as FMCG and automotive.
Gupta believes FY27 and FY28 could be challenging years for the rural economy.
Meanwhile, he remains highly positive on the financial services sector, which accounts for approximately 35–40 percent of the Nifty 50's market capitalisation. Within the sector, he is overweight on public sector banks (PSBs) and private banks, particularly large and mid-sized lenders. He also favours housing finance companies, especially small-cap and select mid-cap players.
Do you believe that a sustained decline in bond yields and oil prices is essential for a healthy rally in equity markets?
Increased bond yields have increased the cost of capital or discount rate used in equity valuations. However, if the future cash flow growth (FCF growth) or earnings growth of many companies might also be significantly high, then despite higher risk-free rates and bond yields, the equity markets can rally.