Despite a barrage of global headlines, volatile sentiment and persistent foreign investor selling, Atul Suri from Marathon Trends believes Indian equities may be quietly laying the foundation for their next move higher.
Speaking to ET Now, Suri argued that while the narrative around India remains subdued and investor sentiment continues to be cautious, market behaviour itself is sending a more constructive signal.
Markets Holding Ground Despite Negative Sentiment
According to Suri, one of the most encouraging signs is that Indian markets have stopped making fresh lows despite facing a steady stream of negative news.”One thing that I am noticing is that the market is not making new lows.”
He pointed out that after falling to around 22,000 in March, the benchmark index rebounded to 24,500 before settling near 24,000. In his view, this suggests the market is attempting to build a base rather than entering a deeper correction.
Suri identified 24,500 on the Nifty as a crucial level.
“For me, the level that I will watch out for, where a breakout would actually tell me that we could make a move towards new lifetime highs, would be 24,500.”
A breakout above that mark, he believes, could pave the way for a move towards 26,500 and potentially fresh record highs.
Falling Crude Adds to Market Comfort
A major factor supporting his outlook is the decline in crude oil prices.
Suri noted that crude had been one of the biggest concerns for the Indian market, but prices are now easing rapidly. He expects crude to settle in the $65-$70 range, levels that prevailed when Indian equities were nearing record highs.
Combined with supportive measures from the Reserve Bank of India and improving currency dynamics, he sees enough triggers in place for markets to regain momentum.
Banking Stocks Emerging as Leaders
When asked where the next leg of market strength could come from, Suri was unequivocal: banks.
He highlighted the strong performance of the Bank Nifty, which is already close to breaking past its previous highs.
“I can clearly see leadership in banks.”
Given the sector’s heavy weightage in benchmark indices, a sustained rally in banking stocks could have a significant impact on the broader market.
He also observed that the information technology sector appears to be stabilising after an extended correction.
“They are not making new 52-week lows. They are forming a base.”
The Hidden Theme: Data Centre Infrastructure
While benchmark indices have struggled to generate excitement, Suri believes several niche themes are quietly creating wealth beneath the surface.
One area that particularly stands out is the ecosystem surrounding data centres.
India may not have direct exposure to global artificial intelligence leaders or large language model developers, but companies supplying critical infrastructure to data centres are seeing growing demand.
“Companies that are suppliers to data centres, you will notice that a lot of those stocks are moving higher.”
These opportunities are largely concentrated in the midcap segment, which helps explain why midcap indices continue to outperform larger benchmarks.
Suri pointed to sectors such as wires and cables, cooling systems and electronic manufacturing as beneficiaries of this trend.
“There is a concept, there is a theme and that is how it is playing out.”
Midcaps Tell a Different Story
The divergence between large-cap and mid-cap performance remains one of the defining features of the current market.
According to Suri, many established large-cap companies are delivering only modest earnings growth, while a number of mid-sized businesses are undergoing transformational journeys.
“There is a lot of good-to-great journey that is happening in the Indian midcap space.”
This, he says, explains why the midcap index is behaving very differently from the broader benchmark indices.
Industrial Metals Preferred Over Gold and Silver
Suri also weighed in on commodities, suggesting that investors may be looking in the wrong place.
After the sharp rally in precious metals over the past year, he believes gold and silver may struggle to generate substantial upside from current levels.
“I personally do not think that silver and gold can make massive up moves.”
Instead, he remains bullish on industrial metals such as copper, zinc and aluminium, which are expected to benefit from global electrification trends and infrastructure spending linked to artificial intelligence and data centre expansion.
“I feel very-very bullish on these industrial metals.”
Liquidity Remains Strong Despite FII Uncertainty
Foreign institutional investor flows remain the biggest unanswered question for the market.
Suri admitted that investors and market participants continue to debate the reasons behind FII underweight positions in India, with explanations ranging from valuations and China to the global AI investment boom.
However, he believes domestic flows remain a powerful source of stability. While growth in SIP inflows has moderated, the trend has not reversed. “It has kind of plateaued out, which also is very good because that is not crisis.”
Narratives Can Change Quickly
Perhaps Suri’s strongest message was that market narratives are often temporary.
He cited examples such as Japan, South Korea and Taiwan, all of which were once ignored by investors before rapidly becoming market favourites. “The narrative is against India.” Yet he believes that can change much faster than investors expect.
“Money chases momentum. The moment you start seeing momentum in India, suddenly all the same guys who are underweighting India for all multiple reasons will say we bought at the low.”
For now, Suri sees a market lacking excitement rather than one lacking opportunity. While benchmark indices remain trapped in a range, leadership is emerging in banks, select midcaps and infrastructure plays tied to the AI and data centre build-out. If the Nifty can decisively clear 24,500, he believes the next chapter of the bull market could begin sooner than many expect.