Stocks to Buy | Dhiraj Agarwal on why this is a stock picker’s market, not an index game​

Despite widespread concerns around tariffs, debt levels, and immigration policy, US markets have shown remarkable strength. Dhiraj Agarwal in an interview to ET Now said that a recent Economist article described the current market mood as one where “nothing ever happens.” In essence, markets are ignoring large macro and geopolitical disruptions, choosing instead to focus purely on earnings performance and fund flows.

Even though the March quarter earnings in India were weak—part of a broader trend over the past four quarters—the equity markets have bounced back sharply. The indices are now just a shade away from their all-time highs. This reflects investor optimism and a forward-looking approach, with expectations of a stronger economic recovery in the second half of the fiscal year and into FY27. Despite short-term stress, investors are staying invested for the long haul.

At the index level, Dhiraj suggests adopting a cautious stance. The upside from here may not be very large, and momentum could slow. However, at the stock or company level, the environment is rich with opportunities. There is a clear polarisation in earnings, with some companies growing at 15–20% while others are flat or even in decline. This makes it a highly selective, stock pickers’ market, where carefully chosen companies can still deliver strong returns.

Currently, the market is witnessing strong supply as well as healthy flows. While it's impossible to predict liquidity trends, Dhiraj notes that if market sentiment stays upbeat, mutual fund inflows—which have recently dipped to ₹20,000–25,000 crore a month—could climb back to ₹40,000–45,000 crore. On the supply side, FY25 is expected to see slightly lower overall equity issuance compared to the massive levels seen in FY24.

Dhiraj doesn’t name specific stocks, but he outlines how within every sector, a few companies are clearly outperforming. In the IT space, second-line companies like Persistent and Coforge are showing strong earnings growth, outpacing larger names like Infosys and TCS. Similarly, in banking, there's a rotation underway—with private banks regaining leadership from PSU banks. Historically, private banks tend to perform better during periods of economic slowdown due to better metrics and valuations, while PSU banks do well in high-growth environments.