New Delhi, April 9 (NationPress) In spite of escalating challenges due to surging crude prices and a depreciating rupee, India's growth trajectory remains strong, with a reported Q3 GDP increase of 7.8 percent and a full-year FY26 growth forecast at 7.6 percent. This is supported by significant private consumption and a manufacturing boost, according to a report released on Thursday.

Recent market fluctuations have established a favorable valuation environment, as the Nifty is now trading at a 5.6 percent discount to its five-year average price-to-earnings ratio, thereby improving the medium-term risk-reward profile for investors, as highlighted by PL Asset Management, the investment wing of PL Capital Group.

Key sectors that have shown promise include metals, energy, pharmaceuticals, industrials, automobiles, and public sector bank financials, while the IT sector has shown weaker performance. Additionally, gold continues to play a vital role as a hedge.

The report states, "While short-term market fluctuations may persist, such corrections often reset market dynamics and create enticing entry points for long-term investors through strategic value purchases."

Looking ahead, the firm anticipates that reductions in tariffs between India and the US, advancements in the India-EU Free Trade Agreement, and the government's Rs 12.2 lakh crore infrastructure initiative under Budget 2026 will enhance export competitiveness, unlock new growth opportunities, and accelerate the domestic capital expenditure cycle, thereby reinforcing India's medium-term growth outlook.

Indian equities have demonstrated resilience owing to strong domestic fundamentals, robust liquidity, and active institutional participation. However, they are not without risks stemming from global tensions that could undermine fiscal stability and growth momentum, the report cautions.

“The rise in crude oil prices and gas supply disruptions are expected to keep inflation elevated, maintain higher interest rates for an extended period, and exert pressure on fiscal deficits and currency stability, with the rupee remaining at risk,” remarks Siddharth Vora, Head of Quant Investment Strategies & Fund Manager at PL Asset Management.

While current valuations may seem appealing, there is a risk of them becoming inflated if earnings are adversely affected by increased input, energy, logistics, and financing costs, Vora explains.

The analyst emphasizes the need for precise sector selection and disciplined risk management, advocating a preference for large-cap stocks while considering factors like value, quality, and low volatility.

aar/pk