Motilal Oswal calls current market phase the 'middle overs' — Time for strategy, not aggression

Mint

3 days ago

India's market journey has moved into a consolidation phase resembling the 'middle overs' in a cricket match, according to the July 2025 Alpha Strategist report by Motilal Oswal Private Wealth (MOPW). Drawing a cricketing analogy, the firm likens the current investment environment to a high-scoring pitch with stable macro fundamentals, and suggests investors focus on strategy and discipline rather than aggressive plays during this phase.
MOPW says the earlier Mar–Apr 2025 correction served as the 'PowerPlay overs,' where entry points offered attractive value, resulting in quick gains over the following three months. However, post-rebound, the markets have entered the "middle overs" — a period where investors should aim to rotate strike rather than go for sixes. This means accumulating quality assets, managing risk carefully, and positioning portfolios for long-term performance rather than chasing short-term momentum.
The report underlines that this phase in markets calls for patience and careful navigation, just as middle overs in cricket require intelligent shot selection and steady run accumulation. Blind aggression, it warns, could be counterproductive at this stage.
MOPW highlights that global equity markets have witnessed divergent trends in 2025, with geopolitical uncertainty dominating the first half of recent months. However, in the latter half, a relative sense of calm returned despite tensions between Iran and Israel and the temporary disruption of oil flows through the Strait of Hormuz. Notably, crude oil prices, after spiking briefly, resumed a downward trend — a sign of the global economy's reduced dependence on the Middle East.
In the US, concerns are rising over a widening twin deficit. The 'Big Beautiful Bill' is expected to push the fiscal gap wider by USD 3.3 trillion over the next decade, with the current account deficit projected to exceed 6 percent — levels last seen in 2006. While trade agreements with partners like India and the EU are underway, MOPW notes that delays in negotiations may extend uncertainty into the next quarter.
On the domestic front, MOPW remains constructive on India's outlook, with positives such as robust services exports, Production Linked Incentive (PLI) payoffs, and Free Trade Agreements (FTAs) offsetting global headwinds. Benign crude prices are also acting as a macro stabiliser. The country's GDP is expected to grow between 6.2–6.7 percent, driven by government spending and resilient consumption.
However, near-term high-frequency data presents a mixed bag. GST collections grew in single digits in June, while IIP slowed to 1.2 percent in May from 2.7 percent in April. In contrast, manufacturing and services PMIs hit multi-month highs, showing sectoral resilience.
Foreign Institutional Investor (FII) flows have remained modestly positive over the past three months, but equity mutual fund flows have decelerated. Historical data suggests that in nearly 90 percent of instances, negative FII flows have coincided with negative monthly equity returns, even if Domestic Institutional Investors (DIIs) continued to buy. Meanwhile, valuations across sectors and market caps have risen sharply, calling for more selective allocation.
Equities: The equity allocation strategy remains neutral with a suggested mix of 65 percent in large caps and 35 percent in mid- and small-cap stocks. For under-allocated investors, the firm recommends considering lump-sum allocations to hybrid funds. In the case of pure equity categories, staggered investments via SIPs or STPs are advised to manage market volatility effectively.
Fixed Income: With the Reserve Bank of India proactively easing policy and ensuring adequate liquidity, the yield curve has steepened. MOPW suggests an overweight position on accrual strategies across credit categories, including Private Credit Strategies, InvITs, and select NCDs. Arbitrage funds, income-plus-arbitrage Fund of Funds, and conservative equity savings strategies may also be considered as tax-efficient fixed income alternatives. However, with limited room for further capital appreciation in long-duration bonds, the report advises gradually reducing exposure to 10–15 year duration strategies.
Gold & Silver: The stance on gold remains neutral, while silver is seen as a tactical bet rather than a substitute for gold. The report cautions investors not to treat silver as a safe-haven hedge in the same way as gold.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.