Market volatility driven by global risks; banks, autos and IT offer buying opportunities: Centrum PMS

The recent fall in the Nifty and broader markets is being driven more by global factors than by domestic weakness, and long-term investors should begin building positions in select sectors instead of waiting for a deeper correction, says Manish Jain, Head of Fund Management at Centrum PMS.The Nifty has dropped about 900 points from its recent peak over the last week, while broader markets have declined further.

Jain said the volatility was unexpected, especially with third-quarter earnings expected to improve.

“The domestic economy continues to remain stable,” he said, pointing to steady gross domestic product (GDP) growth and corporate earnings trends in India.He added that recent market pressure is linked to overseas developments such as the proposed US tariff bill and geopolitical uncertainty in regions including Venezuela and West Asia.

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Jain said investors should avoid waiting for perfect entry levels.

“You can never really time the market to perfection,” he said.

For investors with a two- to three-year horizon, he advised focusing on sectors where earnings growth is likely to improve and domestic conditions remain supportive.

“So, I would be buying banks, I would be buying autos. Maybe even IT at this juncture doesn’t look all that bad,” he said.

On domestic cues, Jain said three factors will shape market direction in the coming months.
First, he said the interest rate cut cycle is largely over and rates are likely to remain stable. Second, the rupee needs to stabilise near current levels. Third, and most important, is earnings growth.He said corporate earnings have been downgraded for four consecutive quarters since late 2024, with expectations of around 12% growth translating into actual growth of 6–7%.

However, he said early signs from banks look better this quarter, helped partly by the recent goods and services tax (GST) rate cut.

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“Everybody’s been reporting higher numbers on a sequential basis,” he said, adding that quarter three results will be key for future market positioning.

He also said the Union Budget next month will be another important trigger for sentiment.

On the IT sector, Jain said he is more positive on large-cap companies than mid-cap firms.

“I would be more bullish on large-cap IT,” he said.

He said the sector has seen cuts in earnings guidance and valuation multiples in recent quarters, but this has created scope for a rotation trade.

“This is one sector that has been neglected,” he said, adding that from a valuation and earnings perspective, risks now appear more balanced.

With a one-year view, he said IT could emerge as a “good dark horse” among market sectors.

For the full interview, watch the accompanying video

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