Stress fracture in market's rise, time to sling caution

Analysts are warning of growing risks to the market's sustained momentum, and even to the possibility of consolidation at current levels.

- PUNEET WADHWA

Domestically, markets are grappling with several challenges, including a slowing economy, as indicated by the latest GDP data for the July-September (Q2) quarter of 2024-25 (FY25), sticky inflation, fluctuations in the rupee, waning consumption, and high interest rates.

India's GDP growth for Q2FY25 fell to a seven-quarter low of 5.4 per cent year-on-year, down from 6.7 per cent in the first quarter of FY25, and lower than market expectations, with a median estimate of 6.5 per cent.

While the Sensex and Nifty indices have become more appealing, with a trailing price-to-earnings ratio of around 22x, Chokkalingam G, founder and head of research at Equinomics Research, observed that small and midcap stocks are still overvalued.