Market Outlook - Strong domestic institutional investor (DII) flows are welcomed, and concerns about "too much money chasing too few stocks" are considered premature ahead of a broader market rally in 2026 [10] - Equity investing is cyclical, with phases of inflows and pauses repeating over time, and investors should only worry after markets have delivered meaningful gains [10][2] Investment Strategy - Preference for businesses with year-to-year earnings visibility rather than those dependent on long-duration government programmes, particularly in sectors like railways and defence [3][4] - Avoidance of original equipment manufacturers in the automobile sector, with a focus on auto ancillary plays instead [8] Sector Insights - Consumption growth is best captured through new-age platform companies rather than traditional consumer staples, with growth driven by channel shifts [7][10] - Digital payment platforms such as PhonePe and Paytm exemplify the trend of rapid penetration-led growth due to consumer migration from offline to digital channels [10] Financial Sector Performance - Non-bank lenders have delivered strong returns in 2025, with companies like Bajaj Finance, Cholamandalam Investment, and Shriram Finance significantly outperforming [10] - Among banks, State Bank of India, HDFC Bank, and Axis Bank have performed reasonably well, while ICICI Bank has seen relative underperformance due to management succession concerns [10]

Group 1 - The Federal Reserve's recent rate cut is perceived as less hawkish than the market anticipated, providing a constructive backdrop for equity investing into the next year [2][4] - The Fed's guidance indicates only one rate cut next year and another in 2027, suggesting a favorable environment for equities, particularly in a soft landing scenario [4][6] - The European economy is showing resilience, with expectations of fiscal easing and monetary easing from the ECB, making it an attractive region for investment [6][9] Group 2 - The US market is viewed as expensive, leading to a preference for investments outside the US, where similar growth prospects can be found at cheaper valuations [8][9] - Emerging markets and continental Europe are highlighted as the best cyclical diversifiers, with anticipated fiscal stimulus contributing to their attractiveness [9] - The AI sector remains a focus for investment in the US, despite concerns over valuations and potential setbacks in the broader AI narrative [10][11]

[Music] It's not just the labor market and tariffs causing concern for investors. Historically, August and September are known for their seasonal weakness in the stock market. Stock market seasonal patterns are the directional tendencies of stock indices based on the time of the year.Certain times of the year tend to be more bullish for stocks, while other times during the year are more bearish. On average, August and September are two of the weakest performing months for US equities. While the start of Aug ...