Seasoned investor Dipan Mehta, Director at Elixir Equities, warns that while markets are rallying, the underlying fundamentals are quietly deteriorating. According to reports from The Economic Times, Mehta told ET Now that "The damage to the fundamentals is yet to be reflected," adding that the real test will come from March quarter management commentary and how companies perform in the June quarter. He emphasized that markets cannot sustain a new bull phase beyond previous highs without stronger earnings backing, noting that the opposite is currently happening. As markets continue their upward trajectory, investors are advised to remain cautious about the sustainability of current gains.
A potential subnormal monsoon could have wider ripple effects across multiple sectors, as reported by The Economic Times. Mehta flagged concerns for fertiliser and insecticide companies, while warning on rural-facing businesses including two-wheelers. He specifically named Hero MotoCorp and Mahindra & Mahindra as stocks carrying meaningful agricultural exposure. Combined with higher oil prices, a weak monsoon could push food inflation up, pressure interest rates, and ultimately weigh on corporate profits and valuation multiples. The agricultural sector remains particularly vulnerable to weather-related disruptions, making it crucial for investors to monitor monsoon forecasts and their impact on rural demand patterns.
After four to five quarters of smooth sailing, the lending sector is entering a more challenging phase, according to The Economic Times report. PSU banks are aggressively competing for deposits, low-cost funds are harder to raise, and the era of easy net interest margins may be ending. For private sector banks including HDFC Bank and ICICI Bank, Mehta sees limited upside as industry loan book growth has slowed from 15–16% to sub-10%. His preferred plays within the sector are multi-product NBFCs — Bajaj Finance, L&T Finance, Cholamandalam, and Poonawalla — along with PSU banks where he still sees room for PE multiple rerating.
Mehta continues to avoid largecap IT stocks citing unresolved uncertainty around artificial intelligence impact on software businesses and enterprise spending, as reported by The Economic Times. Despite expecting decent headline numbers this quarter, he does not believe the earnings season will act as a market catalyst. Regarding defence stocks, he describes the sector as over-owned and momentum-driven, advising investors to wait for price corrections or earnings surprises before entering. His overall message emphasizes enjoying the rally cautiously while watching the June quarter closely for structural headwinds.
