
Gupta added, “We think we are more at risk of seeing downgrades in most consumer stocks earnings over the next one or two quarters and therefore we would still be somewhat cautious on the overall consumers pack.”
It is unrealistic to expect that the top 5% or 10% of the population, which is really where who will benefit from the tax breaks, they will start buying more of soaps or shampoos or buy more milk.
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Kotak Institutional Equities expects the primary beneficiaries of the budget to be low-ticket discretionary items rather than staples or high-end goods like jewellery.
The boost may drive demand for segments such as quick-service restaurants, mid-range hotels, and small tourist activities. However, the firm remains cautious, highlighting that the broader economic environment continues to face challenges, including weak job creation, subpar wage growth, and sluggish overall growth.
Kotak Institutional Equities currently favors companies like ONGC over oil marketing companies (OMCs). The preference stems from concerns about the regulatory interventions affecting OMCs and their significant capital expenditure, which impacts free cash flow and long-term return on equity.
The firm views the entire oil and gas sector as more suited for trading rather than long-term investments, with ONGC standing out as a better option.
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Kotak Institutional Equities recognises significant long-term growth prospects in the solar sector but emphasises a stock-specific approach.
The firm favours asset owners involved in building solar plants and holding independent power producer (IPP) contracts over module and sales providers. In the long run, asset owners are expected to offer greater value.
Kotak Institutional Equities maintains that India’s long-term structural growth story remains strong. However, foreign investors are reallocating funds to the US amid uncertainties fuelled by trade tensions and tariff policies, which have driven a flight to safety towards the US dollar.
The firm believes that as long as the dollar remains strong and trade disputes persist, foreign outflows are likely to continue, leaving the market primarily dependent on local investments. While a tactical market bounce is possible, Kotak continues to advocate a cautious market outlook.
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(Edited by : Unnikrishnan)