Deepak Gupta, Head of Research at JM Financial, flagged export‑oriented sectors—capital goods, auto ancillaries, textiles, chemicals—as next market leaders, citing stable margins that could lift FII flows over the next 2‑4 quarters.
He warned that persistent FII selling has been driven by capital shifting toward AI‑related investments globally and by the rupee’s depreciation against the US dollar and other emerging currencies, but said this headwind should turn into a tailwind as India’s competitiveness improves.
Gupta pointed to the World Bank’s upgraded growth outlook for India and noted that domestic fundamentals have strengthened despite two global headwinds—tariffs and higher crude prices—yet inflation remains below the RBI’s 6% threshold.
On monetary policy, he expects the RBI to begin a rate‑hike cycle, but believes it will be shallow; meanwhile, the surge in IPO activity has increased competition for investor capital, with institutional investors favoring companies that bolster market position.
Regarding FII flows, Gupta said weaker corporate earnings had weighed on sentiment, but recent quarterly results hint at improvement; if companies sustain stable operating margins, he anticipates meaningful uptick in FII inflows over the next 2‑4 quarters.
On insurance, he said regulatory proposals are still in draft and markets may have overreacted; he remains bullish on hospitals due to demand and limited supply but is sitting on the sidelines for insurance until growth improves.