India’s stock market remains in a mixed trend zone across sectors, a situation that might continue for a few more weeks until the results season concludes, says Taher Badshah, Chief Investment Officer at Invesco Mutual Fund – who manages funds worth $11.49 billion.

Sharing his insights on current market dynamics and sector-specific trends amid the ongoing earnings season, Badshah said; “This is the time when the market would want to see if what valuations are being accorded to different companies are in line with what their earnings delivery is.”

In terms of financials, he maintains a balanced allocation, although he acknowledged recent trends in the sector have been mixed. The previous week ended on a somewhat subdued note regarding financials and asset quality, though optimism arose with reassuring signals from some larger banks and a few non-banking financial companies (NBFCs) in terms of asset quality.

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However, certain segments, particularly in microfinance institutions (MFIs), continue to experience stress. Badshah pointed out that companies demonstrating strong execution and successfully navigating challenges are being rewarded, not only within the financial sector but across various industries.

“On the other hand, there are two situations where things are not likely to go your way. You are going to get punished if there is going to be a disappointment or if at all the future looks a little more key – in those situations, market reaction tends to be very severe,” he said, emphasizing the market’s severity toward sectors showing signs of strain or instability.

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Badshah also commented on the aviation sector, describing it as a “proxy play” in the travel and tourism arena. Limited opportunities within this segment have allowed for solid execution by leading companies, which are seeing positive outcomes. The sector’s performance reflects the limited yet significant growth potential in industries linked to travel and tourism.

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