350 stocks sink below 200-DMA! Gurmeet Chadha spots big opportunities despite global tensions

Geopolitical tensions between the United States and Iran have kept global markets volatile, but investors should use the consolidation phase to gradually accumulate quality stocks, said Gurmeet Chadha, managing partner and fund manager at Complete Circle Wealth, in an interview with Anil Singhvi, Managing Editor of Zee Business.

Chadha said the recent correction in Indian equities has created attractive opportunities in several sectors, even as foreign institutional investor (FII) selling continues to weigh on market sentiment.

Crude stability key for market sentiment

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Chadha noted that stability in crude prices remains an important factor for the market outlook. According to him, Brent crude oil moving back to the $86–$87 range is a positive sign for India.

He added that India’s imports of discounted Russian crude have increased in recent months, which is helping manage energy costs. Supply routes for liquefied natural gas (LNG) from the US and Russia through the Red Sea remain stable for now, even though tensions around the Strait of Hormuz remain a risk.

“If crude stays stable, markets could gradually improve. The bigger challenge recently has been heavy FII selling,” Chadha said.

FII outflows and global funds impacting India

Chadha explained that several global funds adjust their exposure to markets based on market capitalisation weight. Since Indian equities have underperformed some emerging markets recently, their weight in global portfolios has reduced.

He also pointed to changes in allocations by large global investors such as the Norway Government Pension Fund Global, which has trimmed exposure to certain markets.

According to Chadha, stabilisation in the Indian rupee and a slowdown in FII outflows will be key short-term indicators for the market.

Banks and NBFCs look attractive

Chadha remains positive on financial stocks, particularly quality banks and non-bank lenders.

He said credit growth in India is still strong at around 13 per cent and may rise further due to higher working capital requirements for companies amid supply chain disruptions caused by geopolitical conflicts.

Among private sector banks, he highlighted ICICI Bank and HDFC Bank, noting that their valuations have become reasonable after the recent correction.

“Top private banks are trading around 12–14 times earnings and close to two times book value. That makes them attractive from a long-term perspective,” he said.

Defence sector offers long-term opportunity

Chadha also sees strong potential in defence stocks as global conflicts increase demand for military equipment and air-defence systems.

He noted that private sector defence companies may benefit significantly because public sector units have limited execution capacity.

Recent expansion announcements by companies such as Solar Industries India in areas like drones and defence equipment highlight the growth opportunity in the sector, he said.

Gradual investment is the way to go, according to Chadha.

Even though he sees things positively, Chadha recommends that investors be careful. He suggests a slow approach, rather than putting all their money in at once.

He explained that the market is in a period of consolidation right now. Many stocks are trading significantly below their 200-day moving averages (DMA). Over 350 stocks in the BSE 500 are currently below this threshold, which opens up chances to buy selectively.

“Investors should accumulate good stocks slowly during this phase. Markets may take some time to stabilise, but such corrections often create the best long-term opportunities,” Chadha said.

He added that sectors with limited exposure to the Middle East conflict, such as telecom and domestic consumption, could also offer opportunities if valuations become attractive.

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