Market Strategy

On precious metals, the firm maintains a neutral allocation stance on both gold and silver, while assigning greater weight to gold. The preference for gold is supported by continued buying from central banks and easing speculative excesses in global gold markets.

The narrowing yield differential between US Treasuries and Indian bonds may also prompt a rotation of global capital toward dollar-denominated assets, analysts said.

Emkay Global retained its FY27 Nifty EPS estimate at ₹1,230, with earnings growth expectations holding at nearly 13%. The report noted that Indian equities have recently lost some valuation support, with the Nifty 50 currently trading at around 19.2x FY27 forward earnings.

Valuations in the small- and mid-cap (SMID) segment continue to appear stretched, with Nuvama Equities noting that they are nearly one standard deviation above long-term averages across key metrics.

Despite heightened volatility and geopolitical tensions, analysts advise cautious investment in resilient sectors. Current market conditions indicate that long-term investors should focus on discipline rather than aggression, as valuations remain supportive for potential returns.

The Sensex fell over 1,000 points, or 1.3%, to 76,557, while its NSE counterpart, the Nifty 50, declined 257 points, or 1.07%, to 23,740, a day after recording their best intraday gains in five years.

Bond yields had risen sharply in March since the onset of the US–Iran war, with the benchmark 10-year yield touching a high of 7.13%. However, yields softened across the curve yesterday, amid optimism over the US-Iran ceasefire, alongside a broadly reassuring policy stance from the central bank.

Since the onset of the US-Iran conflict, frontline indices have corrected by more than 10%, making valuations relatively attractive. The Nifty 50 is currently trading at approximately 18x earnings, reflecting a 14% discount to its long-period average (LPA) of 20.9x.

Nifty 50 is trading at a 12-month forward price-to-earnings (P/E) ratio of 17.7x, which is 15% discount to LPA of 20.9x. Also, its price-to-book (P/B) value of 2.6x represents a 8% discount to its historical average of 2.9x

Goldman Sachs prefers defensive consumption and upstream energy over domestic cyclicals and downstream energy. It remains overweight on banks, defensive consumption including staples, telcos (inelastic demand), and defense.