What Is Ashwini Agarwal’s Outlook on Banks, IT, and Consumption Ahead of Q2 Earnings?
Balanced View From Demeter Advisors on Sector Rotation
Veteran fund manager Ashwini Agarwal of Demeter Advisors has offered a constructive yet selective outlook on Indian equities, emphasizing that the valuation and earnings environment for banks and financials remains reasonable. He believes that large banks which underperformed recently, along with select micro financials, could be strong contenders for investment over the next 12 months.
💡 Agarwal added that the market is entering a rotational phase where investors should balance near-term stock prices with longer-term growth visibility. He recommends focusing on companies delivering strong earnings that have underperformed in recent quarters, as these could offer attractive entry points in a consolidating market.
According to Gulshan Khera, CFP®, Indian-Share-Tips.com’s Technical Analyst and SEBI Regd Investment Adviser, “The essence of Agarwal’s commentary is rotation and reversion — sectors that underperformed due to valuation fatigue are now finding support at reasonable levels. Financials appear well-placed to benefit from improving credit availability and rising consumption momentum.”
For traders exploring short-term momentum within index-linked setups, monitoring trends via our Nifty SEBI Regd Advisory can help identify high-probability technical pivots during earnings season.
Banks, IT, and Consumption: Divergent Earnings Paths
✅ On the financial side, Agarwal sees a reasonable balance between valuations and earnings growth. With credit expansion steady and asset quality resilient, large-cap private and PSU banks may deliver healthy Q2 performance. He also notes that microfinance institutions (MFIs) could continue to benefit from rural credit revival and policy-led inclusion.
Turning to the technology sector, Agarwal cautioned that IT valuations remain challenging and that Q2 results will determine the trajectory of the sector. While much of the negative sentiment is already priced in, revenue momentum remains sluggish due to cautious global tech spending.
In contrast, consumer discretionary names are expected to post positive commentary in Q2, aided by a rebound in rural demand and GST-driven consumption recovery. Lower inflation and festival-linked spending could further reinforce the trend.
In such a rotational setup, investors should focus on portfolio balance and avoid overexposure to overheated segments. A combination of high-quality lenders, select consumer plays, and improving industrial names could offer better risk-adjusted returns.
For those trading financial-heavy derivatives, using tactical setups from our Bank Nifty Option Advice can provide strategic positioning for volatility around the earnings calendar.
Macro Drivers: Credit, Consumption, and Policy Support
📈 Agarwal believes the next leg of growth will be supported by credit availability, GST compliance, and policy-driven consumption boosts. Fiscal discipline and steady liquidity conditions are likely to provide a favourable environment for cyclical sectors to outperform in FY26.
He added that a healthy lending environment and the government’s focus on infrastructure could help financials sustain their earnings momentum. Meanwhile, export-oriented IT and manufacturing companies may need a few quarters before their order books stabilize.
Overall, the investment thesis remains bottom-up — focusing on earnings leadership rather than thematic chasing — with a one-year investment horizon being optimal for selective entry points in financials, consumers, and niche industrials.
Investor Takeaway
🎯 Ashwini Agarwal’s outlook highlights a rotational yet opportunity-rich environment across sectors. Financials are attractively placed, IT needs earnings confirmation, and consumer segments could surprise positively in Q2. Investors should maintain balance between cyclical recovery themes and valuation discipline, positioning for growth-driven earnings rather than momentum chases.
Explore more insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
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