Macquarie’s Sandeep Bhatia sees slow burn ahead for markets, eyes festive pick-up

The Indian market is expected to remain in a “slow burn phase” for the next couple of months, according to Sandeep Bhatia, Managing Director and Head of Equity India at Macquarie Capital. He advised caution, citing high valuations, geopolitical volatility in the region, and uncertainty over US tariffs.Bhatia believes that the recent Goods and Services Tax (GST) cuts are more beneficial for the economy than the income tax cuts announced earlier, as they benefit a wider population and are directly linked to spending. However, he anticipates that consumption will remain broadly weak through the current quarter. A strong festive season in the October-December period could trigger a market rally, but significant upward movement would require more stability on the economic and political fronts.

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Regarding sectors, Bhatia reiterated a positive view on autos, stating the goods and services tax (GST) cuts provide “a lot of legs” for the sector, especially for manufacturers with new model cycles like Maruti Suzuki India and Hyundai.
He remains structurally positive on the hotel sector for investors with a two-to-three-year horizon but expects the recent pace of gains to moderate.Describing the banking sector as a “bit of a tired sector,” Bhatia noted that while banks have not been down and out, they have underperformed in recent months. He believes they “can actually do better” and could regain their momentum, supported by a potential rate cut and a consumption comeback during the festive season. “Well-managed banks look interesting,” he stated, favouring domestic-facing sectors in a geopolitically volatile world.

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Conversely, he advised a two-and-a-half to three-year investment horizon for the information technology (IT) sector, expressing caution on near-term results.

For the full interview, watch the accompanying video

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