Investor Focus Should Now Shift 'From Events to Earnings', Says Motilal Oswal Private Wealth

Trump tariffs, border tensions and broader geopolitical events took the better of investor sentiment at a time when Q4 earnings were supposed to dominate the direction of the stock market. While results remained largely in-line with D-street estimates, a few surprises did manage to trigger some movements, but all-in-all 'events' overshadowed the impact of quarterly earnings this time.

Analysts are expecting a shift in this trend as valuations settle at fair level with event-driven volatility either behind or largely priced-in by markets. "Investor focus should now shift 'From Events to Earnings'...early Q4 results suggest improving corporate performance, and a 14% CAGR in Nifty EPS over the next two years is expected," Motilal Oswal Private Wealth said in its recent note.

"Valuations for large caps (Nifty 50) have moved from attractive to fair following the recent rally, so return expectations should be moderated," the note further read.

Interestingly, during recent market downtrends, mid-cap and small-cap stocks remained quite resilient compared to blue-chips. However, the former stocks continue to trade at premium levels when compared to their long-term averages. Analysts believe that selective opportunities are now starting to emerge in these segments.

What about Gold?

Undoubtedly, gold's double-digit rally had everyone watching. Many global financial institutions, including Goldman Sachs and UBS have already raised their commodity price targets. Earlier this month, Goldman Sachs mentioned that rising global risks, such as increased recession fears and trade concerns, might even push gold prices to $3,700 per ounce by year-end. In an extreme-case scenario, prices could even surge to $4,500 per ounce.

However, easing geopolitical tensions have led to a price pullback, with some investors even switching to profit booking.

"While gold reached all-time highs in April amid global uncertainty, it now appears stretched, as some of that uncertainty has eased," the note read. From an asset allocation perspective, the private wealth management has maintained a neutral stance on gold.