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ETMarkets.comIndian equities are shifting focus to domestic strengths, with a multi-year growth runway anticipated. Indian equities have entered a phase where domestic fundamentals are beginning to take centre stage, even as global cues continue to influence short-term sentiment.According to Devang Mehta, Director – Equity Advisory at Spark Capital Private Wealth Management, the country’s investment cycle is showing clear signs of turning upward after years of consolidation.A combination of government-led capital expenditure, improving liquidity conditions, and steady corporate balance sheets is setting the stage for a multi-year growth runway.Speaking to Kshitij Anand of ETMarkets, Mehta said that he believes the next market leaders are likely to emerge from capex-oriented sectors such as power automation, renewable energy, engineering solutions, select financial intermediaries, and niche healthcare, supported by consumption recovery and policy stability.In this edition of ETMarkets Smart Talk, he outlines where investors should focus, how earnings are shaping up, and what risks remain as markets navigate an evolving global environment. Edited Excerpts –Live EventsThanks for taking the time out. We have seen fresh momentum in markets which pushed benchmark indices higher last week largely on trade deal hopes. How are you reading all this?The recent market momentum was indeed driven by optimism surrounding a potential US-China trade deal, which reduced near-term uncertainty and encouraged a risk-on environment among investors.Reports that US and Chinese officials had agreed on a framework for a trade truce provided a strong tailwind for global equities. Markets reacted positively to the potential for reduced tariffs.The US Federal Reserve delivered an expected rate cut last week, which initially supported risk assets. As risk appetite increased, traditional safe haven assets like gold and US Treasuries saw their demand wane and prices fall.The market momentum reflects a cautious but clear "risk-on" environment, driven by a potent mix of diminishing trade policy uncertainty and overwhelming enthusiasm for AI-related growth.Precious metals, which broke all records, cooled off a bit in the past few weeks. Do you see further weakness, or is it just a pause?After a historic rally, price fall was more a short-term sentiment shift and natural profit-taking which ensures there is gravity.The long-term trajectory for Gold & Silver remains positive, buoyed by structural factors like global de-dollarization, persistent supply deficits in Silver and more industrial applications, central bank accumulation, and an environment of low real interest rates and geopolitical tensions.Having said that both can have periods of volatility and consolidation in the short and medium term.The US Fed seems to be on an easing spree with the recent 25 bps rate cut. How would that impact RBI policy back home and equity markets?The Fed’s move reaffirms that global central banks are now in a data-dependent phase rather than a clear easing cycle. For India, this means external funding conditions are improving, but volatility in global risk appetite will continue.A lower US interest rate generally makes emerging markets such as India more attractive to foreign investors, as it can lead to increased capital inflows seeking higher returns.This is a clear path for RBI to cut repo rate in its next meeting in early December. Its last policy was defined as a dovish pause. With the US cutting rates, we would expect RBI to also move in the same direction.The benign outlook for headline and core inflation as a result of the downward revision of projections opens up policy space to further support growth.Most of the Nifty50 companies have come out with their results. How are you reading into numbers, management commentary, and revival of earnings?The Q2 FY25 Nifty 50 results have been mixed and largely in line with moderated expectations, with overall earnings growth remaining in the single digits.However, management commentary expresses optimism for an earnings revival in the second half of the fiscal year. A strong consensus among corporate leaders is that the second half of FY25 will be stronger, driven by the festive season, potential revival in rural demand, government spending, and a low base effect from the previous year.Many companies emphasized their focus on operational efficiencies, cost control measures, and strategic initiatives to navigate the challenging environment.The current quarter's results suggest that the earnings cycle might be bottoming out. While Nifty EPS (Earnings Per Share) estimates for FY25 and FY26 have seen some modest downgrades, primarily due to the underperformance of heavyweights in the commodity space, the intensity of these cuts has moderated.Also, do you see any red flags that investors should track or watch out for in the next few quarters from the earnings?The Indian market remains sensitive to global factors like potential U.S. tariffs, shifts in US interest rates affecting FII flows and borrowing costs, and volatile commodity prices especially crude oil, as India is a major importer.The IT and pharma sectors could continue to see a bit of uncertainty and investor indecisiveness due to potential changes in US policy.Sectors and companies which derive the lion's share of revenues and profits from exports need to be watched carefully. Earnings here would tend to be surrounded with uncertainty.Which sectors are looking attractive now, post Q2 earnings?It seems that there is a concerted effort from the government and the Reserve Bank of India (RBI) working in tandem to boost liquidity, consumption, and capital expenditure, which should aid growth and make India a compelling story for foreign and domestic investors.Sectors poised for significant growth and potential investment opportunities include capex-oriented themes like power automation, HVDC, Engineering, Cryogenic conditions, Renewable Energy, FinTech, financial intermediaries, depositories, Niche Healthcare & select discretionary consumption including autos and components.What is your view on the recent wave of new listings on Dalal Street? Are there any interesting names you’re tracking? Also, given that most IPOs leave little on the table for retail investors, do you think it’s better to look for opportunities in the secondary market?It’s heartening to see that, while previous years were dominated by a few sectors, 2024 and 2025 have seen a broad distribution of IPOs across industries, including Automotive, Consumer Discretionary, Industrials, IT, and Green Energy amongst many new age sectors. The recent trend shows fewer but larger, higher-quality IPOs entering the market, suggesting a more selective approach by both issuers and investors. The IPO market is experiencing a significant shift in investor sentiment, prioritizing sustainable profitability over aggressive growth narrativesThe IPO activity in India reflects strong investor confidence and a booming primary market, though a discerning approach is advised due to valuation concerns in specific areas. For upcoming IPOs, the ability to showcase robust financials, clear profitability trajectories, resilient business models, efficient capital allocation and strong regulatory compliance will be crucial in gaining investor confidence and achieving successful market debuts.With strong macro tailwinds and earnings expected to improve, it would be imperative to choose and pick good businesses with robust business models from the secondary or listed market space for long term wealth creation and multiplication.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)Add as a Reliable and Trusted News Source Add Now! 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