Markets may stabilise in coming months; Paytm, defence stocks among top picks: Marketsmith India

While global risks such as rising crude oil prices, elevated bond yields and higher interest rates continue to weigh on investor sentiment, Mayuresh Joshi, Director – Research at Marketsmith India, believes markets could stabilise over the next few months if geopolitical tensions ease.

Joshi also remains positive on Paytm following its guidance and continues to favour select defence stocks, including Solar Industries and Zen Technologies.

Joshi said the current market correction is largely driven by external factors that investors are already aware of. He added that while sentiment remains weak, the downside may be limited if global conditions improve.

According to him, the biggest concerns remain crude oil prices, rising bond yields and global monetary tightening. He warned that if crude prices move beyond $120 per barrel, markets could witness another bout of volatility.

"If crude spikes beyond $118-$120 per barrel, there is a high possibility that these levels are probably breached. You might have levels of $130 or $135 per barrel," he said.

However, Joshi believes these risks are already reflected in stock prices and expects sentiment to improve if geopolitical developments turn favourable.

"In our own sense, these are known factors that the market has already digested," he said, adding that any progress on global mediation efforts could lead to a sharp pullback in oil prices and bond yields.

He also noted that earnings expectations have moderated, with corporate profit growth estimates being revised lower from around 14-15% to 11-12%, while foreign institutional selling and liquidity concerns in smaller companies have added pressure on broader markets.

Despite the near-term challenges, Joshi expects markets to find stability over the coming months.

Defence stocks remain preferred picks

Discussing the defence sector, Joshi said Solar Industries and Zen Technologies continue to be his preferred investment ideas because of their competitive positioning and strong order visibility.

While acknowledging the growth prospects highlighted by Aequs management in its aerospace business, he said Solar Industries and Zen Technologies offer stronger structural advantages.

He said Solar Industries benefits from backward integration, return ratios of around 27% ROE and more than 35% ROCE, along with a defence order book of around ₹50,000 crore.



On Zen Technologies, he pointed to its strengths in simulators, unmanned systems, software capabilities and defence contracts as reasons for his positive view.

Paytm guidance remains strong

Joshi also expressed confidence in Paytm, saying the company's outlook remains positive even before the implementation of Merchant Discount Rate (MDR) changes.

According to Joshi, the proposed MDR changes could provide another leg of growth by boosting payment processing revenue, improving margins and strengthening profitability.

He added that Pine Labs is another company to watch as MDR implementation could also benefit its merchant acquiring business, particularly in higher-value transactions at supermarkets and large retail outlets.

For the full interview, watch the accompanying video

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