Market Consolidation Expected in FY27 Amid Global Stability Concerns, Says Mirae Asset's Somil Mehta

Original: ETMarkets Smart Talk| FY26 a year of consolidation, not breakdown; global stability key for revival in FY27: Somil Mehta

The Economic Times•Apr 8, 20264 min

In a Nutshell

Somil Mehta, Head of Retail Research at Mirae Asset ShareKhan, predicts that FY27 will be a year of market consolidation following a challenging FY26. Key factors for recovery include global stability, easing geopolitical tensions, and continued domestic growth drivers in India.

Key Points

01FY26 was marked by volatility and negative returns due to global geopolitical tensions and rising crude oil prices.
02A market revival in FY27 hinges on global stability and a return of foreign institutional investor (FII) inflows.
03Sectors like banking, defence, and infrastructure are expected to perform well due to strong domestic fundamentals.
04Gold and silver should be viewed as hedges against volatility rather than core investments.
05Indian markets are trading at a premium compared to peers, justified by strong economic growth.

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Full Summary

Somil Mehta, Head of Retail Research at Mirae Asset ShareKhan, reflects on FY26 as a year of market consolidation rather than breakdown, primarily due to global geopolitical tensions, rising crude oil prices, and foreign investor outflows. Despite these challenges, he notes that the Indian economy's underlying strength remains intact. Looking ahead to FY27, Mehta emphasizes that a revival in market sentiment will depend on global stability, particularly easing geopolitical risks and stable crude oil prices. He identifies key sectors for investment, including banking, defence, and infrastructure, which are expected to benefit from government spending and strong domestic demand. Additionally, he advises maintaining a small allocation in gold and silver as a hedge against market volatility. While Indian markets trade at a premium compared to other emerging markets, recent corrections have made large-cap stocks more attractive for long-term investors.

Key Figures

10-15%

Recommended allocation in gold and silver for risk balancing

FY26

Year marked by negative returns and market volatility

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Why It Matters

The outlook for FY27 suggests that investors may see improved market conditions if global stability is achieved, potentially leading to better investment opportunities and returns.

Who is affected

Investors in Indian equities, particularly in sectors linked to domestic growth.

What to know

Investors should consider diversifying their portfolios and focusing on sectors with strong fundamentals.

FAQ

Key factors include global stability, easing geopolitical tensions, stable crude oil prices, and a return of foreign institutional investor inflows.

Investors should focus on banking, defence, capital goods, and infrastructure sectors due to strong earnings visibility and policy support.

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