IIFL Capital's GV Giri sees biggest upside in financials, bullish on metals and internet stocks

Indian equities could see a stronger earnings cycle over the next few quarters, with financials, metals and select internet companies emerging as key beneficiaries, according to GV Giri, President and Head of Research – Institutional Equities at IIFL Capital Services.

“The biggest upsides will come in financials, lending financials, banks, and NBFCs,” Giri said.

While the market is not expecting major rate cuts, he also does not see the possibility of rate hikes. If geopolitical tensions ease in the coming weeks or months, expectations for policy rates could soften further, providing relief to lenders and supporting their stock performance.

He is also positive on several internet companies that have underperformed despite maintaining strong growth momentum, citing Zomato and PB Fintech as examples.

In addition, he remains bullish on metals and other cyclical sectors. According to him, any resolution to global uncertainties would have a broad impact, benefiting both ferrous and non-ferrous metal companies in India.

Giri believes the market is likely to look beyond near-term earnings weakness and focus on improving macro conditions, especially the possibility of lower crude oil prices. He expects the current phase of earnings downgrades to largely end after the June quarter.

He believes data centre-related and power transmission themes remain attractive over the long term. However, after the sharp rally in many stocks, investors should be selective on entry points.

"Real estate would be one of the strongest performing sectors," he said while discussing the potential impact of a revival in foreign institutional investor flows.

Within automobiles, Giri prefers passenger vehicle makers over two-wheelers. He expects steady growth in the four-wheeler segment, supported by rising penetration and increasing value addition. Among manufacturers, he favours Maruti Suzuki, Hyundai Motor India and Tata Motors' passenger vehicle business.

Watch accompanying video for more

Live stock market updates—follow our blog