Stocks to Watch: Balanco Sees Financials, Realty, and PSUs as Market Leaders
Global markets, including the ASX 200, DAX, and CAC, have surged to record highs. In an interview with ET Now, Laurence Balanco highlighted that while the S&P has rebounded, it is the rest of the world, supported by a weakening US dollar, that has outperformed since April's lows.
The Nifty has completed a bullish double bottom pattern, indicating a move toward 26,300. Balanco affirms continued strength in Indian equities despite near-term consolidation, with the longer-term trend remaining upward.
India’s smallcap index, which lagged since December, is now playing catch-up. This rotation into previously underperforming areas is expected to broaden market participation and strengthen the current uptrend.
The breakdown of the Dollar Index below 100 signals the end of a multi-year dollar bull market. With expectations of a drop to the 89–90 range, emerging markets like India are likely to benefit, marking the beginning of a broader rerating.
While the initial target remains 26,300 in the near term, Laurence Balanco projects a long-term Nifty target of over 37,000, driven by continued momentum and sectoral leadership.
Recent market movement shows underperformers like FMCG and IT gaining traction. However, Balanco maintains that core leadership will remain with financials, while laggards benefit from short-term rotation.
Beyond financials, real estate and PSUs are showing renewed strength. Balanco highlights broader participation across the realty sector and improved trends in PSUs as signs of new leadership forming.
Within the consumption theme, auto stocks like Bajaj Auto and M&M are recovering faster than FMCGs. While FMCG remains structurally weak, select consumer platform and internet stocks are seeing breakouts.
IT midcaps are staging a rebound, but Balanco views the broader IT sector trend as one of underperformance due to heavyweights dragging the index. The strength is likely short-lived and not structural.
Overall, Balanco's insights suggest a positive outlook for the Indian market, with financials, real estate, and PSUs leading the charge. Investors should keep an eye on these sectors for potential opportunities.
