US slowdown, tariff uncertainty pose downside risks for Indian markets, says Nuvama

Nuvama warns that the Nifty 50's decline could persist due to weak earnings and high valuations, with global uncertainties further heightening risk concerns.

The brokerage remains defensive on Indian markets, cutting IT to "underweight" from "neutral" and increasing consumer stock exposure.

Adds that a market recovery depends on earnings growth or policy support.

Nuvama says earnings outlook remains muted due to shrinking margins, low demand, and global risks and could delay a lasting market bottom.

Nuvama stays "overweight" on consumer, private banks, insurance, telecom, pharma, cement, and chemicals and "underweight" on industrials, metals, power, IT, autos, and state-owned firms.

Adds that small - and mid-cap stocks remain expensive, making them vulnerable to further declines.

The Nifty is down 15 per cent from its recent peak. Small - and mid-cap indexes are down 24 per cent and 20.5 per cent, respectively, as per data compiled by LSEG.