The Indian stock market has staged a mild recovery over the last two months, prompting Vinit Bolinjkar, head of research at Ventura, to predict another 7-8 per cent upside from current levels if certain conditions are met. In an email interview with Saloni Goel, he further said that pharma, small finance and auto ancillaries are his top sectoral bets while he would avoid consumer durables and construction EPC names. Edited excerpts: The Nifty 50 has gained 2 per cent in a month, trimming its YTD losses. What is your year-end target, and what could be the likely triggers?
The
Nifty has already staged a recovery, gaining around 2.4 per cent in July after a prolonged five-month losing streak, trimming its YTD losses to roughly 6–7 per cent. From current levels, we see the potential for another 7–8 per cent upside by year-end, provided a few key triggers play out:
- Large private banks delivering a reversal in NIM compression, which has been a persistent drag on earnings
- Spot crude finding relief and normalising, giving oil marketing companies much-needed breathing room after a string of crude-driven losses
- Autos continuing their stellar run through the rest of the year
If these three play out in tandem, alongside the broader earnings momentum already visible in Q1 FY27 (BFSI, metals, tech and autos all beating expectations), we believe the index has a credible path to further gains this year.
The Q1 results season is almost over now. Is the worst priced in India Inc earnings?
By and large, yes, most sectors have factored in their earnings performance, and this is visible in current valuations. Q1 FY27 has surprised positively at the aggregate level: ex-
OMCs, corporate earnings grew around 17 per cent YoY, led by BFSI, metals, technology and autos.
The one notable exception is consumer durables. The market has not yet priced in the compressor norms coming into effect from March next year; players with existing manufacturing capacity in place should navigate the transition comfortably, while those without could see real cost and competitive pressure. That's a divergence within the sector the market hasn't fully differentiated yet.
Last month, IT posted its best monthly performance in 6 years. Where do you see the sector headed from hereon? How should investors approach the sector?
Nifty IT rose 18.4 per cent in July, its best month since June 2020, on the back of a "reverse AI trade" narrative as global tech wobbled while Indian IT services rebounded sharply.
We remain constructive on niche IT players: Coforge, Persistent Systems, LTIMindtree and Tech Mahindra, which have seen relatively lower disruption from AI adoption and are better positioned to benefit from AI-led transformation. We're more cautious on the larger legacy players, where the impact of AI on traditional service models is still evolving. Wider AI adoption could pressure margins in the near term across the board, but faster growth in AI-enabled solutions could create meaningful re-rating opportunities for the right names. On balance, we'd treat the sector as a wait-and-watch opportunity rather than a broad-based buy, be selective rather than chasing the July move.
Where do you see the next big market opportunity? Can you name some sectors you are overweight on?
We are overweight on a few themes:
Pharma and healthcare: Healthcare inflation running well into double digits, strong room for domestic expansion, and pharma exports rising every quarter, aided by the US Biosecure Act.
Defence, aerospace and precision engineering: Several domestic players have now achieved genuine technological know-how, backed by active government push for domestic arms and ammunition manufacturing and naval fleet expansion. The theme is also a key beneficiary of the broader China+1 diversification trend.
Small finance, MSME and MFI lending: The sector has turned a corner, with disbursements picking up and a systematic reduction in NPAs. Most players are extremely positive on the lending outlook from here.
Auto ancillaries and capital goods: Many players have carved out durable niches, with those catering to the EV boom likely to outperform within the space. Capital goods manufacturers have held up well despite ongoing supply chain issues and have seen a strong jump in margins.
Any sectors that look crowded in the current market that you would advise investors to avoid?
We would be selective in consumer durables and construction EPC, where strong growth narratives have driven significant valuation expansion. The long-term opportunity in both spaces remains intact, but elevated expectations, B2G exposure bringing along extended receivables period, competitive intensity, execution risk and margin sustainability concerns warrant caution at current valuations. Within these spaces, we'd prefer companies with strong fundamentals, healthy balance sheets and reasonable valuations over the broader pack.
CAS implementation has been off to a rocky start with wide divergence between Sensex and Nifty. Could this undermine institutional investors' confidence in India's market infrastructure?
We see this as more of a transition issue than a credibility issue. The
Closing Auction Session for eligible F&O stocks went live on 3 August, and day one saw a roughly 200-point, six-year-wide divergence between the Sensex and Nifty closing levels, a function of the shift from VWAP-based closing prices to auction-discovered ones. NSE itself has flagged that such variations are expected during the transition, and the gap has already been narrowing session-on-session as arbitrage capital steps in, exactly the self-correcting behaviour you'd want to see.
Institutional investors, particularly FIIs familiar with auction-based closing mechanisms that are standard practice in developed markets globally, are unlikely to read this as a red flag. If anything, it reflects India's market microstructure moving closer to global best practice. What will matter more for institutional confidence is whether SEBI and the exchanges fine-tune the auction window or eligibility criteria if the divergence doesn't fully normalise over the coming weeks.
Stocks, gold and debt: How would you allocate to different categories amid the current market mood?
We believe investors should maintain a diversified approach across asset classes rather than take concentrated bets. Equities remain our preferred asset class given India's structural growth drivers, but after the strong rally in several pockets, allocation should now focus on quality businesses with earnings visibility and reasonable valuations rather than chasing momentum.
Gold continues to have a role as a portfolio hedge against global uncertainty and currency volatility, while debt provides stability and liquidity, especially given the current volatility.
A balanced allocation could look like 60–70 per cent equities, 15–20 per cent debt and 15–20 per cent gold, depending on individual investor risk profile.
Compared to a year ago, investors have become more selective within equities and are placing greater importance on diversification, given elevated geopolitical risks. A year back, the debt market was still pricing in a clean multi-cut RBI easing cycle; that's now largely played out, so debt's role has shifted more toward stability than a source of returns. Gold, after its exceptional 2025 run, has moved from being a momentum trade to more of a staggered-accumulation and rebalancing tool.
Disclaimer: Views and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.
 "Nifty can rise 7-8% by year-end; avoid legacy IT stocks: Vinit Bolinjkar")
