Equirus Wealth suggests that investors should prioritize global inflation and corporate earnings over US election results for market direction. The brokerage remains positive on the telecom sector due to potential tariff hikes and data growth, while advising a selective approach to IT services amid uneven demand. Macro factors like geopolitical tensions in West Asia also remain a key risk to watch.
Investors focusing on US election results as a primary indicator for market direction may need to shift their gaze toward more fundamental economic drivers. According to Amit Bivalkar, Head of Equirus Wealth, political events often trigger short-term market reactions, but they rarely dictate long-term performance. Instead, the real trends that investors should track include the path of global inflation, interest rate decisions by central banks like the Federal Reserve, and the underlying strength of corporate earnings.
The telecom sector continues to emerge as a point of interest for long-term growth. With digital adoption rising across India, telecom companies are increasingly focused on improving their average revenue per user. The brokerage view remains constructive on the sector, provided companies maintain discipline in their pricing and manage capital spending effectively. As the intensity of spending on network infrastructure moderates, the sector is expected to transition into a more consistent cash-generating business.
In contrast, the IT services sector requires a more careful and selective approach. Current demand for technology services remains inconsistent, and a broad-based positive view may not be appropriate. While the potential of AI-driven transformation is a major narrative, the market is now prioritizing companies that can show immediate earnings and actual money-making projects. IT firms that have strong, established relationships with clients and proven methods for delivering projects are likely to perform better as discretionary spending on technology starts to normalize.
Beyond domestic sectors, the macro environment also presents specific challenges. India remains an attractive destination for foreign investors, supported by strong demographics and a rapidly growing digital ecosystem. However, attracting more foreign direct investment will likely depend on regulatory consistency, such as simpler tax rules and better contract enforcement. At the same time, geopolitical tensions in West Asia continue to pose a risk to global oil prices. Since higher crude oil prices can lead to domestic inflation, investors should watch how these external factors impact the cost of living and, by extension, interest rate policies.
Moving forward, the health of the market will largely depend on how domestic companies report their quarterly numbers and how global inflation data shapes up. Investors may track upcoming management commentary for signs of pricing discipline in telecom and the recovery of discretionary technology spending in the IT sector.