Indian equity markets are navigating a difficult phase, weighed down by weak sentiment, underperformance in heavyweight stocks and persistent selling pressure from foreign institutional investors. The broader market has offered little relief either, leaving investors grappling with how best to position portfolios in an environment marked by uncertainty and subdued momentum.

Speaking to ET Now, Sunny Agrawal from SBI Cap Securities said the current market weakness should not distract investors from their core task.

“Yes, definitely, sentiment is very weak as far as markets are concerned. But having said that, what I feel is that ultimately, as an investor or as a trader, our job is to identify companies which are likely to report healthy earnings growth over a period of two to four quarters, and those are the companies where one can gradually start deploying money.”

He attributed much of the pressure to muted performance from a few index heavyweights and ongoing geopolitical tensions, which have resulted in sustained foreign institutional investor selling. Despite this, Agrawal pointed out that select pockets within sectors continue to show strength.

“A case in point: a few mid-sized banks have reported a good set of numbers, whether it is Federal Bank or a very robust provisional update from Catholic Syrian Bank. So again, within each sector, there are a few names which are likely to do well in terms of earnings growth.”

Agrawal believes the auto and auto ancillary space stands out in the current environment. He highlighted strong December quarter volume growth and a robust medium-term outlook for the sector, supported by industry projections.

“As we speak, what we feel is that auto and auto ancillary as a sector is relatively well placed… since FY27 is also likely to be very robust for the auto OEM industry. So overall, the beneficiary will be auto ancillaries.”He added that recent corrections have made valuations attractive in several names.

“We have seen a decent correction in many auto ancillary names, a case in point being Belrise Industries or, for that matter, Pricol. So, good-quality auto and auto ancillary stocks are a place to be if somebody wants to invest for a period of six to 12 months.”

On the strong debut of the Bharat Coking Coal IPO, Agrawal said the sharp listing gains were not entirely unexpected, citing multiple supporting factors.

“One of the reasons for a very robust listing can be a very low price, wherein a low double-digit kind of price usually tends to attract many retail investors. At the same time, valuations were also comfortable at the time of the issue.”

He noted that the company was offered at around 6.5 times EV-to-EBITDA, compared with peers trading at 10 to 12 times.

“Now, post-listing, it seems that even the valuations are closer to its peers, and obviously, a low float in the stock also helped. Only 35% was reserved for retail, and the issue size was on the smaller side, around ₹1,000 crore.”

Agrawal said Bharat Coking Coal should be viewed as a proxy play on the steel sector.

“Depending on the growth of the steel industry, we will see demand for coking coal continue to go up. If somebody has invested in the IPO looking at listing gains, maybe it is the right time to book profits, while long-term investors can expect around 12% to 14% CAGR returns from here on.”

Turning to metals, Agrawal highlighted the sharp rise in silver prices and its impact on Hindustan Zinc’s performance.

“There has been a very exponential rise in silver prices, and that is getting reflected in Hindustan Zinc’s numbers.”

He pointed out that silver has become a significant earnings driver for the company, contributing close to 40% of profitability in the previous quarter. However, Agrawal sounded cautious on the sustainability of the rally.

“Fundamentally, nothing has changed such that, in the span of two or three months, actual ground demand for silver has gone up two or three times. Obviously, supply restrictions by China and some speculative activity have led to such a sharp spike.”

He warned that a correction cannot be ruled out.

“Ground demand continues to remain the same, so hoarding could be one of the key reasons for silver moving up. A correction can happen anytime soon, so it may be time to remain cautious on silver prices on the commodity side.”

Looking ahead to 2026, Agrawal said he remains constructive on select auto names.

“I would like to stick to an auto major. One OEM name is TVS Motor.”

He believes the two-wheeler and three-wheeler segments will continue to perform well, areas where TVS Motor has a strong presence. As a mid-cap ancillary play, he highlighted Pricol Industries.

“We believe the fair value of Pricol is closer to ₹850. They are a market leader in driver information systems and fluid management control systems.”

Agrawal added that new product launches and recent acquisitions could drive future growth.

“They have ventured into disc brakes, which are likely to become mandatory beginning this year, and they have also acquired a plastic moulded business. These new products will drive earnings growth for Pricol going forward.”

In a market clouded by uncertainty, Agrawal’s message remains clear: stay selective, focus on earnings visibility, and use volatility to accumulate quality names with strong medium-term prospects.