Daily Voice: US midterm elections could shift market sentiment, but sustained trend reversal uncertain, says Head of Equirus Wealth

Among sectors, Bivalkar is constructive on the medium-term outlook for telecom. Rising data consumption, increasing digital adoption and the possibility of further tariff hikes provide a strong foundation for revenue growth, he said. If pricing discipline persists and investment intensity moderates, the telecom sector could emerge as a highly attractive cash-generating industry, he added. Do you expect tensions in West Asia to ease and oil prices to cool, particularly after the US midterm elections?

Any easing of geopolitical tensions in West Asia would be positive for crude oil prices, but forecasting the timing remains difficult. While the US elections may influence foreign policy priorities, developments on the ground will continue to drive energy markets. A moderation in tensions could lead to some softening in oil prices, but a meaningful decline would require greater stability in global supply chains and energy flows.

For India, the impact on inflation, fiscal balances, and corporate profitability remains significant. Do you see the possibility of a shift in market sentiment, particularly after the US midterm elections? A shift in market sentiment after the US midterm elections is certainly possible, but I would be cautious about linking a sustained market trend solely to the election outcome. Markets are likely to remain far more influenced by inflation trends, interest rate expectations, corporate earnings, and geopolitical developments.

If policy uncertainty recedes and earnings remain resilient, risk appetite could improve. However, valuations and liquidity conditions will ultimately determine the durability of any rally. Do you agree that the US Federal Reserve is unlikely to hike interest rates in October but could raise them at its December policy meeting? That appears to be a reasonable base case. If inflation remains elevated and economic activity continues to hold up, the Fed could choose to stay on hold in October and retain the option of tightening in December.

However, the Fed remains data-dependent, and upcoming inflation, labour market, and growth indicators will be crucial. Higher energy prices could also complicate the inflation outlook, making the December meeting particularly important. What steps should the Indian government take to make the country more attractive to foreign direct investment (FDI)? India's structural advantages are already well recognised, including its large domestic market, favourable demographics, and growing digital ecosystem.

The next phase of attracting FDI should focus on improving regulatory certainty, accelerating approvals, simplifying tax compliance, and ensuring policy consistency. Continued investment in infrastructure, logistics, and industrial ecosystems, coupled with stronger contract enforcement, would further enhance investor confidence and support long-term capital inflows. Are you bullish on the telecom sector?

Could it emerge as a strong cash-generating sector? I am constructive on the telecom sector's medium-term prospects. Rising data consumption, increasing digital adoption, and the possibility of further tariff hikes provide a strong foundation for revenue growth. While capital expenditure requirements and spectrum-related obligations remain challenges, the sector is gradually moving toward stronger free cash flow generation.

If pricing discipline persists and investment intensity moderates, telecom could evolve into a highly attractive cash-generating sector. Do you believe the AI infrastructure trade is showing signs of a reversal? I would hesitate to describe it as a reversal. What we may be seeing is a healthy reassessment of valuations after a period of extraordinary optimism. AI-related investments remain a powerful structural growth theme, but investors are increasingly focused on monetisation, returns on capital, and earnings visibility.

As a result, companies with demonstrable revenue and profit generation are likely to outperform those relying primarily on future expectations. The theme remains intact, even if parts of the trade experience periodic corrections. Is this the right time to take an overweight position in the IT services sector? The sector is becoming increasingly interesting, but I would favour a selective rather than a broad-based overweight stance at this stage.

Demand recovery remains uneven, and discretionary technology spending is yet to fully normalise. At the same time, AI-driven transformation is creating significant opportunities for leading players. Companies with strong client relationships, healthy deal pipelines, and credible AI-led growth strategies are better positioned to outperform as demand visibility improves.