ET NEWS

Venkatesh Balasubramaniam of JM Financial shared a comprehensive view of the Indian equity markets, highlighting the challenges and opportunities amid the current environment. He emphasized that the markets are trading at elevated valuations, with the headline indices priced at nearly 23–24 times one-year forward earnings—roughly one standard deviation above the mean. While such valuations could be justified by high earnings growth, actual EPS performance has been disappointing. FY25 began with expectations of 15% EPS growth but ended at 3.4%, and current-year projections have been revised down to roughly 7%, implying modest returns at best. Given this context, Venkatesh believes meaningful gains are unlikely from the broader indices, though individual stocks may still offer opportunities."So, earnings have got revised up. Similarly, third quarter again while on a quarter-on-quarter basis the EPS growth will be maybe a little less of a decline and fourth quarter you will see an improvement, but these are already factored in the numbers. I mean, it is not like numbers for the index as a whole are getting revised up and please remember banks are almost 30% of the index," he said.Earnings rerating appears muted, particularly as banks constitute about 30% of the index. While bank earnings have slightly exceeded expectations, the broader EPS trajectory remains flat, making double-digit EPS growth this year improbable. Overvalued sectors include pharmaceuticals and NBFCs, while Venkatesh remains underweight on infrastructure, defence, and certain industrial plays. Metals, meanwhile, are neutral.On energy, recent U.S. sanctions on Russian oil firms have caused crude prices to rise, negatively impacting refiners like Reliance, but benefiting upstream producers such as Oil India and ONGC, with a preference for Oil India in a rising oil-price scenario.Regarding IT, Venkatesh cautioned that large-cap IT growth will remain limited (~5%) due to factors like AI-driven deflation. Mid-cap IT names such as Coforge may see stronger growth (15–20%), but large-cap gains are already priced in, warranting a neutral stance. He favors domestic consumption plays, particularly autos and hospitality.In autos, Maruti Suzuki and Mahindra & Mahindra are top picks for four-wheelers, while Hero MotoCorp and TVS Motor lead in two-wheelers, driven by strong demand and electric vehicle adoption. For hospitality, Leela and Ventive are preferred due to strong demand and underinvestment in hotel supply."Consumption is strong and there has been gross underinvestment when it comes to hotel infrastructure in India. So, while demand is growing at 8%, the supply is growing only at 5%. So, we remain very positive on hotels. The problem with hotels is everyone is always scared when the new hotels will come online," he said.On IPOs, Venkatesh observed that market exuberance and rapid reratings indicate expensive valuations, supported by mutual fund inflows despite FII selling. Finally, on financials, he has moderated his earlier negative stance but remains cautious, awaiting full earnings results before potentially adjusting sector allocations.

The Indian Ambassador to the US, Vinay Mohan Kwatra, held discussions on the India-US energy security partnership and discussed the recent developments in this area.Sharing the details in a post on X on Saturday, Ambassador Kwatra said, "Had a fruitful discussion with Deputy Secretary James Danly on the India-US energy security partnership and shared perspectives on recent developments in energy trade and ties."The meeting comes shortly after the US President, during the Diwali celebrations at the Oval Office, claimed to have discussed with PM Modi India's import of Russian oil."I spoke to Prime Minister Modi today and we just have a very good relationship. He's not going to buy much oil from Russia. He wants to see that war end as much as I do. He wants to see the war between Russia and Ukraine to end. They're not going to be buying too much oil. So they've cut it way back, and they're continuing to cut it way back", he said.While PM Narendra Modi acknowledged the call between himself and the US President, however there was no reference to Oil purchases.Previously on October 18, while addressing a bilateral lunch with Ukrainian President Volodymyr Zelenskyy in the White House, the US President had claimed that India had significantly reduced its oil imports from Russia and is now pulling back entirely, stating that New Delhi "will not be buying oil from Russia anymore."On October 16, India responded to comments made by Trump about PM Modi's assuring him to halt Russian oil purchases, stating that the country's energy sourcing is guided by its national interests and the need to protect Indian consumers.Responding to media queries, MEA spokesperson Randhir Jaiswal said, "India is a significant importer of oil and gas. It has been our consistent priority to safeguard the interests of the Indian consumer in a volatile energy scenario. Our import policies are guided entirely by this objective. Ensuring stable energy prices and secured supplies have been the twin goals of our energy policy. This includes broad-basing our energy sourcing and diversifying as appropriate to meet market conditions.""Where the US is concerned, we have for many years sought to expand our energy procurement. This has steadily progressed in the last decade. The current Administration has shown interest in deepening energy cooperation with India. Discussions are ongoing," he added.

US President Donald Trump on Friday ruled out meeting Canadian Prime Minister Mark Carney, citing a controversial advertisement he called “dishonest” and threatening to derail trade negotiations between the two countries.Speaking to reporters at the White House ahead of his trip to Asia, Trump criticised the Ontario provincial government for the timing of a television ad featuring former President Ronald Reagan. The ad, which criticised tariffs, ran during the first two games of the World Series.“They could have pulled it tonight,” Trump said. “Well, that’s dirty play. But I can play dirtier than they can, you know.”Trump had referenced the ad on Thursday night when announcing his decision to terminate trade negotiations with Canada. He accused the ad of being “fake” and said it was designed to influence US courts.Also Read: Trump wants China’s hand in solving his Russia problem“What they did is really dishonest. And I heard they were pulling the ad. I didn’t know they were putting it on a little bit more. They could have pulled it tonight,” he told reporters.On his social media platform Truth Social, Trump added, “The Ronald Reagan Foundation has just announced that Canada has fraudulently used an advertisement, which is FAKE, featuring Ronald Reagan speaking negatively about Tariffs. The ad was for $75,000. They only did this to interfere with the decision of the U.S. Supreme Court, and other courts. TARIFFS ARE VERY IMPORTANT TO THE NATIONAL SECURITY, AND ECONOMY, OF THE U.S.A. Based on their egregious behavior, ALL TRADE NEGOTIATIONS WITH CANADA ARE HEREBY TERMINATED. Thank you for your attention to this matter! President DJT.”When asked if he planned to meet Carney in Asia, Trump replied bluntly, “No, I don’t have any plan to.”Also Read: Trump likely gets his friend PM Modi a new union with CanadaOntario Premier Doug Ford responded on Friday, saying he would pause the ad on Monday to allow trade talks to resume. “I’ve directed my team to keep putting our message in front of Americans over the weekend so that we can air our commercial during the first two World Series games,” Ford said.The ads, reportedly funded by the Ontario government, have been running on major US networks and are estimated to have cost $75 million. Trump’s reaction underscores rising tensions over trade and tariffs with Canada, the United States’ second-largest trading partner.

The U.S. dollar was almost flat on Friday after dipping following fresh inflation data that showed U.S. consumer prices increased less than expected in September, keeping the Federal Reserve on track to cut interest rates again next week. The Consumer Price Index rose 0.3% last month and 3.0% in the 12 months through September. Economists polled by Reuters had forecast the CPI increasing by 0.4% for the month and rising 3.1% year-on-year. The U.S. dollar index was last down 0.021% at 98.934, after earlier falling as much as 0.2%, still on track for a modest weekly gain. "The headline was a bit softer than expected," said Marc Chandler, chief market strategist at Bannockburn Capital Markets. "The dollar was sold on the news, even though the market had nearly 100% confidence before the report that the Fed would cut rates, not only next week, but in December." The CPI report was published despite an economic data blackout because of the government shutdown. The figure, used by the Social Security Administration to calculate its cost-of-living adjustment for millions of retirees and other benefits recipients, was initially due on October 15. The euro rose and was last up 0.06% at $1.163. Business activity in the euro zone grew at a faster pace than expected in October, led by the bloc's services industry, a survey showed on Friday. ALL EYES ON TRADE Trade war worries were back on the agenda after U.S. President Donald Trump said all trade talks with Canada were terminated over an advertisement by the province of Ontario which featured a recording of former President Ronald Reagan speaking negatively about tariffs. The Canadian dollar was last slightly weaker at 1.40 per U.S. dollar, but market reaction overall was fairly subdued. Investors' focus remained on the looming meeting between Trump and Chinese President Xi Jinping next week. The proposed Trump-Xi meeting in South Korea has spurred some expectations of a resolution to the on-again-off-again trade war between the world's top two economies. "I think expectations are quite high for the Trump-Xi meeting, with the upside risk of a significant de-escalation following the face-to-face meeting," said Ben Bennett, head of investment strategy for Asia at L&G Asset Management. New U.S. sanctions on Russian suppliers Rosneft and Lukoil over Russia's war in Ukraine pushed up oil prices. That weighed on currencies tied to oil imports, including the yen. The yen's performance is also linked to the policies of Japan's new Prime Minister Sanae Takaichi, widely viewed as a fiscal and monetary dove. The yen weakened to a two-week low and last fetched 152.85 per U.S. dollar. Data earlier on Friday showed Japan's core consumer prices stayed above the central bank's 2% target, keeping alive expectations of a near-term rate hike. Takaichi is preparing an economic stimulus package that is likely to exceed last year's $92 billion to help households tackle inflation, government sources familiar with the plan told Reuters on Wednesday. Sterling was down 0.15% at $1.33, after stronger-than-expected retail sales that were boosted by demand for gold from online jewellers. It was down about 1% this week after soft inflation data had investors adding to expectations for a rate cut from the Bank of England this year.

Oil prices fell on Friday as skepticism crept into the market about the Trump administration's commitment to sanctions on Russia's two biggest oil companies over the war in Ukraine. Brent crude futures settled 5 cents, or 0.1%, lower at $65.94 a barrel, while U.S. crude futures finished at $61.50 a barrel, down 29 cents, or 0.5%. Both benchmarks had risen earlier in the session, extending gains of more than 5% made on Thursday after the sanctions were announced, but retreated in the last two hours of trading. They still ended the week over 7% higher, the biggest weekly rise since mid-June. "There is renewed skepticism these sanctions will be as harsh as they are said to be," said John Kilduff, partner with Again Capital LLC. U.S. President Donald Trump hit Russia's Rosneft and Lukoil with sanctions to pressure Russian President Vladimir Putin to end the Ukraine war. The two companies together account for more than 5% of global oil output, and Russia was the world's second-biggest crude oil producer in 2024 after the U.S. The sanctions prompted Chinese state oil majors to suspend Russian oil purchases in the short term, trade sources told Reuters. Refiners in India, the largest buyer of seaborne Russian oil, were set to sharply cut Russian crude imports, industry sources said. "Flows to India are at risk in particular," Janiv Shah, a vice president of oil markets analysis at Rystad Energy, said in a client note. "Challenges to Chinese refiners would be more muted, considering the diversification of crude sources and stock availability." Kuwait's oil minister said the Organization of the Petroleum Exporting Countries would be ready to offset any shortage in the market by raising production. The U.S. said it was prepared to take further action, while Putin derided the sanctions as an unfriendly act, saying they would not significantly affect the Russian economy and talking up Russia's importance to the global market. Britain imposed sanctions on Rosneft and Lukoil last week and the European Union approved a 19th package of sanctions against Russia that includes a ban on imports of Russian liquefied natural gas. The EU also added two Chinese refiners with a combined capacity of 600,000 barrels per day, as well as Chinaoil Hong Kong, a trading arm of PetroChina, to its Russian sanctions list, its official journal showed on Thursday. Looking ahead, investors were also focusing on a meeting between Trump and Chinese President Xi Jinping next week as the pair work to defuse long-standing trade tensions and end a spate of tit-for-tat retaliatory measures.