After the first quarter ended, the business updates of companies are sending out the first signals of how the quarter played out. These signals are mixed. While some companies have shown huge positivity like Bajaj Finance and Titan, several others are hinting at a cautious stance. The entire FMCG pact seems to have struggled to keep sales steady. Clearly there has been a degrowth in major FMCG segments.

Among the banks, we are seeing the data show mixed trends. The CASA ratios seem to be trending down while credit growth is also relatively soft. Retail businesses are clearly struggling and seem to be trending downward. Under these circumstances, the broader markets are showing growing bullishness, especially in areas like microcaps and small caps.

The sustainability of this divergence is suspect and should be tracked closely. Investors need to move towards a more cautious stance in the expensive parts of the market and illiquid stocks. The results season will start in the coming week and the first few results will set the context for the forthcoming season.

The markets seem to be ignoring the first signals received at the end of the quarter. Investors must thread this space very carefully. Invest should take investment actions after thoroughly examining every company result, reevaluating guidance, and reassessing future projections. The careless trading which we see in markets is running on leverage and could pose a risk if the markets correct swiftly.

This is a time to raise your cautious investment stance.

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