Even as markets grapple with geopolitical uncertainty following the escalation of the Iran crisis and the recent hike in gold import duty, Dipan Mehta, Director, Elixir Equities believes the broader investment landscape remains driven largely by earnings momentum and global developments rather than policy tweaks alone.
Speaking to ET Now, Mehta said the market continues to remain hostage to developments emerging from the Middle East, with investors unwilling to take aggressive positions until there is greater clarity on the Iran situation.
“Well, nothing much has changed in the last week or so. We are still struggling with finding to find a solution to the Iran crisis and the market can make a move only depending upon how the situation improves or deteriorates over there,” Mehta said.
He added that while the ongoing earnings season has been stronger than expected, investors are choosing to focus more on the future implications of geopolitical tensions rather than the numbers already reported.
“In the meantime, we have had a good earning season in place, but investors have been discounting good numbers also because they are the past and going forward the full effect of the war will come into place in this quarter,” he said.
According to Mehta, the corporate earnings picture outside software services and large-cap IT has largely been encouraging. He pointed to strong performances from auto companies, NBFCs, FMCG players, and several midcap names, suggesting that India Inc. has displayed resilience despite global uncertainty.
“I think that I have been pretty surprised with the numbers which have come through especially a lot of midcap stocks have come with good set of numbers,” he said.
“Even FMCG which was the laggard has delivered good set of numbers.”
However, he cautioned that the sustainability of this momentum will depend heavily on how long geopolitical tensions persist. If the Iran conflict drags on for several more weeks or months, investor sentiment could weaken sharply and future earnings expectations may come under pressure.
Despite the uncertain backdrop, Mehta said staying completely away from the market is not practical. Instead, he is selectively accumulating quality businesses that have corrected or remained flat despite delivering strong operational performance.
“Keep on nibbling here and there, here and there something interesting comes up, a good number comes through,” he said. “This particular period is a great time to buy good quality businesses which may be available at reasonable valuations.”
Among the companies he highlighted were Coforge, which he believes could emerge as a winner amid the ongoing AI-driven transformation in technology services, and SJS Enterprises in the auto ancillary space.
He also mentioned growing interest in the defence sector, particularly ideaForge Technology, noting that the company’s latest numbers were “fantastic.”
Other names that featured in his watchlist included Neuland Laboratories, Tata Capital, HDB Financial Services, and Fractal Analytics.
Speaking on the financial sector, Mehta reiterated his preference for NBFCs over traditional banks, arguing that the banking industry is facing structural challenges due to intense competition for deposits and quality borrowers.
“The banking industry is in a complete ocean and there is excessive competition, especially for deposits and even for good quality borrowers,” he said.
He noted that while a handful of lenders continue to grow at a healthy pace, many large banks are struggling to maintain net interest margins and sustain balance-sheet expansion. In contrast, diversified NBFCs and microfinance-focused lenders have delivered robust growth along with better control over asset quality.
Among the stronger performers, he referred to names such as Bajaj Finance, L&T Finance, Poonawalla Fincorp, and AU Small Finance Bank.
Within pharmaceuticals, Mehta said he remains optimistic but cautious, particularly in the CDMO segment where earnings volatility can often be high. He pointed to the recent performance of Wockhardt as especially encouraging.
“Wockhardt came with a very good set of numbers and if they are able to maintain this kind of momentum in terms of their existing core business, then it is attractively valued,” he said.
At the same time, he acknowledged the difficulty in assessing whether the strong earnings seen in some pharma names represent a sustainable shift or merely a temporary spike.
Throughout the interaction, Mehta repeatedly clarified that the companies mentioned were not formal recommendations but stocks that he and his clients either own, are evaluating, or may consider investing in going forward.
His broader strategy, however, remains clear — focus on unique, fundamentally strong businesses that have become reasonably valued amid temporary uncertainty, and invest with a longer-term perspective rather than reacting to short-term volatility.
