Indian market needs 5-6% more correction for better valuations: Andrew Holland

“If the market was to fall another 3-5%, valuations will start to become a little more compelling. We’re getting to oversold territory, particularly in the banking index, which might see bounces,” according to Andrew Holland, CEO at Avendus Capital Alternate Strategies.

Holland noted that weaker economic growth and earnings revisions are weighing on investor sentiment. The market lacks a strong catalyst, such as increased government spending, to drive significant recovery.

“Unless the government starts spending, there’s no multiplier effect going into 2025-26,” he said.

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He expects earnings per share (EPS) growth for 2025-26 (FY26) to range between 5-10%.

On a global level, Holland highlighted the importance of US policies under President-elect Trump and potential Chinese stimulus in shaping emerging market sentiment. “If China throws in some stimulus and tariffs are less severe than expected, flows could start coming back to emerging markets,” he explained, though he added that the dollar index currently signals otherwise.

Among sectors, Holland sees information technology (IT) as a relatively safer bet given the ongoing market uncertainties and as it benefits from currency tailwinds and steady demand.

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However, he remains cautious on renewables, noting that while the long-term growth outlook is strong, “there’s no real catalyst for these shares to move higher in the short term.”