However, Atul Suri, CEO of Marathon Trends, remains optimistic, believing that this recent correction could be a precursor to a stronger market performance later in the year.
In an interview to CNBC-TV18, he highlighted that while the market may continue to be stock-specific in the immediate future, a broader rally could take shape in the second half of the year, providing renewed momentum at the index level.
One key takeaway according to Suri is the market’s capacity to absorb substantial foreign institutional investor (FII) outflows. With FIIs selling a record ₹1,17,000 crores in recent months—surpassing the selling volume seen even during the peak of the COVID-19 crisis in March 2020—the market only experienced a 6% drop. This, he suggests, signals the increased depth and resilience of India’s markets. Domestic inflows have largely compensated for the FII outflows, a factor Suri sees as evidence of growing market maturity.
Suri also observed that recent earnings reflect a mixed bag across sectors, with no clear winners or losers, indicating a stock-specific market environment. In sectors such as FMCG and banking, performance has varied, with certain stocks standing out despite sector-wide challenges. He expects this stock-specific trend to continue in the near term, while India’s macroeconomic stability and the government’s potential measures to stimulate demand will support the market’s resilience.
In terms of sectoral themes, Suri pointed out that banking—particularly private sector banks—could lead in the next market rally. Despite underperformance over the last two years, he believes certain private and public sector banks are showing signs of strength, with robust fundamentals and growth potential. Given the weight of banking in the Nifty, he sees this sector as a potential catalyst for broader market gains.
Pharma is another sector Suri remains bullish on, especially given its traditional stability during periods of uncertainty. In the long run, he remains committed to the industrials sector, particularly engineering and construction, which he sees as poised for continued growth as government spending gains momentum. This industrial trend, he believes, will persist as a key driver for the Indian markets, underpinning long-term market gains.
Turning to commodities, Suri is particularly bullish on gold, which he describes as experiencing a “super cycle” breakout. With gold prices around $2,750 per ounce, he anticipates further upside, targeting approximately $3,125 per ounce, which would represent a 14-15% gain. He also sees potential for silver, which he believes could catch up in performance as the precious metals rally continues.
In contrast, Suri forecasts a bearish outlook for Brent crude, expecting prices to trend downward to around $70 per barrel. Despite the geopolitical tensions in the Middle East, Brent crude has not managed to break through $80 per barrel, a signal Suri interprets as indicating a weaker trajectory for oil.
Below are the excerpts of the interview.
Q: We’re down close to around 7% after the super run that we’ve seen- more than 20% in a single year (Samvat 2080). What’s your take? Where are we headed from hereon?
Suri: I do think that maybe towards the second half of the year, the market would really do a big pullback. It will be more stock specific in the next few months, but the second of the year I feel would be much, much better at an index level.
The last month has been a bit of a dampener, with about 6% downside on the market. But I also look at that in a certain amount of positivity. If you look the FII sell number was ₹1,17000 crores, that’s a massive number. That’s the highest number ever. And if we have to go back, we have to look at something like March 2020 that’s the COVID month where FIIs sold about ₹65,000 crores. Obviously the index also has doubled. But remember, at that stage, the market fell 40% and today we have been able to absorb such a large selling thanks to the domestic flows, but with a 6% kind of hit. So actually, I feel that it really demonstrates the point that Indian market depth has increased, where you can sell about a one lakh crore stock, and yet you will find that the market has not collapsed. So I for one, look at it as the glass half full. Obviously, these kind of adjustments, which came as a surprise thanks to the China trade etc, are not going to go on forever. The important thing that comes up for us right now is the kind of earnings that are coming out. They are a mixed bag. There’s no sector where there are outright winners or outright losers. What you’re seeing is even a sector like FMCG, which has got hammered, where the feeling is things are bad. Some stocks have done well, even among banks in the private sector space, some stocks have done well, some have not done well. So what I feel is that going on the China trade, or that massive FII number will, at some point in time pause, or the pressure will reduce. But what is going to happen in the next few months is really what sort of numbers come out. As I said, there are mixed bag. There is no sector or theme that is absolute clear cut winners. What you’re seeing is in every sector there are going to be winners and losers. So I do feel for the next few months, things may be a little more stock specific, but beyond that, I feel that the country’s macros, are fantastic. As I said, the government has lot of bullets. The bullets have been retained. They’ve not been fired. And I do think that the government will take action to revive the flagging demand and the economy.
Q: Talk to us about themes. As they say, fish, where the fish are, so which are the ponds where there is abundance of fish?
Suri: What I am looking for in this 6% to 8% kind of correction is, which are the sectors that are falling less? Because I feel that as and when markets reverse, you will find leadership or early breakouts happening here. So if you look at a market that has been correcting for the last one month, the first sector that stands and it is a sector that I have been underweight, not very optimistic on, is private sector banks. I feel private sector banks are holding out very well. So I feel that a sector that has not done well for two years, selectively some of the private sector banking stocks can lead out. Some of the PSU banks also which have been beaten blue and all PSUs have been written off. I do think that they can also do a comeback. So I feel that banking as a sector, and it’s very important, simply because of the weightage banking has in the Nifty I think that banking for once, can be the early breakout. If that happens, it’s very good for the index as a whole.
Another space which I like, where I think the numbers are good, is pharma, again, a wonderful sector, very good in times of uncertainty. So I think Pharma is another sector that looks very, very good. I continue to remain very bullish on industrials. I think that the mega trend playing out for our market for many years is the whole industrial space, the engineering construction related space, they have corrected, and after a few months, when government spending can restart and they can be more aggression, I feel that the industrials will do well. So these themes would play out. But in the next few months, I feel it’s going to be little more stock specific, because in every sector, you’ll find that, as I said, private sector banks, some have come out with fantastic numbers, some have not come out with good numbers, and that’s why you’ll find the market being little more differential, not very thematic or sectorial. But I feel to the second half of the year, industrials will continue to lead and be leaders for this bull market.
Q: Gold has been twinkling. We are boasting about markets giving good returns up 20%, gold is up 20% as well. Where do you see that one headed? And also on Brent crude. Where are both these two headed?
Suri: I feel gold has definitely been a sector, stock, theme, which has clearly broken out big time. It is almost like a super cycle, kind of breakout. So it’s around $2,750 per ounce, my target is around $3,125 per ounce, that’s another 14% to 15% upside. So that’s fantastic for a commodity that’s already trending well.
For traders, they could be a catch up that happens in silver, because silver is something that is relatively underperforming. So I feel that towards the end of the rally, silver could also do a very big catch up. So I think that’s where I look at precious metals.
The second area that’s of great, great importance to us is crude and what I look at with great amount of optimism, or positivity, that in spite of all the problems in the Middle East, Brent crude is not able to even take out $80 per barrel. My target for Brent crude is around $70. So I do think that that commodity wants to go lower. In spite of all the geopolitical issues, you’ll find that there is no spike. So even on so called good news for the commodity, the commodity is not going up. That clearly tells me that Brent crude is headed lower, I feel that we would see it at $70 per barrel sooner than later.