Amid the escalating ground war in Gaza, the uncertainty surrounding the West Asian crisis has reached its peak. The duration and consequences of this conflict remain unknown. As a result, V.K. Vijayakumar, the Chief Investment Strategist at Geojit Financial Services, advises investors to maintain a cautious approach.
It's worth noting that the global equity markets are currently more affected by the increase in US bond yields than by the Israel-Hamas conflict, according to him. The US 10-year bond yield, exceeding 4.9 percent, is expected to remain a significant challenge for stock markets, especially in emerging markets. Continuous selling by Foreign Institutional Investors (FIIs) is likely to continue putting pressure on the markets.
On a positive note for India, the drop in Brent crude oil prices to $85 is significant. This news is expected to have a favorable impact on aviation, paints, and tire stocks.
Investors are encouraged to monitor the performance of high-quality large-cap stocks such as Maruti, ICICI Bank, HDFC Bank, Reliance Industries (RIL), ITC, and Larsen & Toubro (L&T), all of which have reported strong Q2 results. These companies offer good earnings visibility and are likely to experience substantial institutional buying when normalcy returns.
As of Wednesday, BSE Sensex has declined by 132 points, standing at 63,742 points. Some of the laggards in the market include Asian Paints, Nestle, Maruti, and Kotak Mahindra Bank, each experiencing a drop of over 1 percent.
(With Agency Inputs)