Stories
Markets to Stay Range-Bound Until Foreign Outflows Ease Says LightHouse Canton MD
- •Abhay Laijawala states that markets will likely remain range-bound until foreign outflows ease significantly, despite strong domestic macroeconomic fundamentals.
- •Foreign investors still account for 15 percent of the overall market, making their flow direction crucial for determining market trends.
- •The Indian telecom sector offers clear earnings visibility for the next three to five years, driven by ARPU monetization and balance sheet deleveraging.
- •September-quarter earnings are projected to accelerate with Nifty 50 aggregate net profit expected to rise by 22-23 percent year-on-year.
- •LightHouse Canton remains cautious on consumer staples due to near-term concerns from potential monsoon shortfalls linked to El Nino, despite a 25 percent valuation discount.
Key Questions Answered
The Indian telecom sector has clear earnings visibility for the next three to five years. Having completed its capital-intensive phase, it is transitioning into a structural cycle of ARPU-driven monetization, free cash flow generation, and balance sheet deleveraging, amplified by regular tariff rationalizations and subscriber premiumization toward 5G and Fixed Wireless Access.
September-quarter (Q2 FY27) earnings are expected to remain healthy and likely accelerate in headline growth compared to the June quarter. This momentum is backed by strong domestic macroeconomic fundamentals, a benign base, and a rebounding nominal GDP growth rate crossing the 10 percent threshold, with Nifty 50 aggregate net profit projected to rise by 22-23 percent year-on-year.
The market remains range-bound due to a severe liquidity imbalance driven by relentless foreign portfolio outflows, with foreign investors still accounting for 15 percent of the overall market. Until foreign selling abates completely, market sentiment will continue to feel heavy and disconnected from strong corporate health and domestic macro realities.
