Stocks to Buy | Earnings, Sectors & Risks: Jigar Mistry’s Roadmap for the Next 6 Months

Jigar Mistry in an interview to ET Now said that India’s macroeconomic landscape is highly favourable at present. Inflation remains comfortably within the RBI’s target range, and both the fiscal deficit and current account are under control. He notes that expectations of a 25 basis point rate cut are growing, further supporting market sentiment. In his view, India stands out as a macroeconomic darling in a world facing global uncertainty.

Jigar Mistry highlights a key concern: while macro indicators are stable, the microeconomic dynamics are starting to shift. In recent years, growth was driven primarily by capex from the central and state governments, along with PSUs. However, that engine is slowing. Mistry explains that the central government’s latest budget focused more on reducing taxes and putting cash in consumers’ hands, while state governments have shifted spending towards populist schemes. As a result, actual capex has declined, leading to a slowdown in corporate earnings and economic activity. Mistry believes this macro-to-micro transition is where confusion and risk lie.

When discussing the ongoing earnings season, Jigar Mistry points out that IT majors have underwhelmed, with only Infosys performing slightly better than peers. Banks and financials have delivered in line with expectations. He observes that last quarter, despite a higher number of earnings beats than misses, the growth came mainly from cyclical and turnaround sectors—those with lower index weightage. This quarter, for the first time since COVID, analysts are beginning to cut earnings estimates for Nifty companies. According to Mistry, this shift in trend is a crucial signal for investors.

Jigar Mistry sees continuing headwinds in the IT sector, citing weak deal flow and negligible support from currency depreciation. This double whammy, along with relatively high valuations, makes IT less attractive. On the flip side, Mistry identifies sectors like pharmaceuticals, healthcare, and speciality chemicals as showing meaningful potential. He remains particularly constructive on banking and financials, which he believes offer both earnings stability and valuation comfort.

Mistry also raises red flags in portfolio construction. He warns about “narrative stocks,” where market capitalisation has risen much faster than earnings, often driven by retail enthusiasm. According to him, these stocks are vulnerable because liquidity, like sentiment, can quickly reverse. He also cautions against overexposure to monopolistic or regulated businesses, noting that changes in administered pricing or policy decisions can swiftly erode their advantages. Mistry references recent examples in gas and exchange companies to make this point.

Jigar Mistry takes a broader philosophical view as well, pointing to historical parallels. He explains that every major technological shift—whether the agricultural revolution or the industrial revolutions—was accompanied by periods of conflict. As artificial intelligence transforms global systems, Mistry warns of potential economic and social upheavals. He advises investors to stay alert to speculative excesses, especially in sectors where valuations have become disconnected from fundamentals.

In conclusion, Jigar Mistry believes India remains fundamentally strong at the macro level. However, he emphasises that sectoral shifts, weakening earnings, and global volatility could create challenges in the months ahead. He advises a balanced strategy, combining optimism with caution, and urges investors to focus on quality names and risk management as they navigate this evolving market environment.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)