He believes that India’s strong domestic demand, proactive fiscal and monetary measures, and sectoral growth drivers provide a solid foundation for sustainable wealth creation. Edited Excerpts –
Q) With Washington’s additional 25% levy, doubling U.S. tariffs on Indian goods to a punitive 50% – how are you reading into this for Indian Inc.?
A) The doubling of US tariff on Indian goods to 50% poses challenges for Indian exporters. The additional 25% tariff will be effective August 27, 2025, thus providing time for further negotiations.
The high tariff rate will impact around 60-70% of India’s exports to the US and will pose some challenges for Indian exporters, particularly in the Textiles, Gems and Jewellery, Auto components sectors.
Overall exports to the US are around 2% of GDP and hence it will have limited impact on the overall GDP growth. India predominantly remains a domestic demand driven economy and its medium to long-term fundamentals remain strong.
While the tariff rate is still under negotiations, we expect the Government to provide support to the impacted sectors, supporting them as they navigate through this difficult period.
Q) Do you think with external headwinds the process of generating alpha will be more challenging?
A) A large domestic market and growing middle class reduces India’s vulnerability to global slowdowns. While certain export markets may face short-term challenges, other markets will open up as a result of FTA agreements with other countries.Initiatives such as personal tax cuts, interest rate cuts and GST reforms are expected to boost consumption in the coming years and will mitigate negative impact due to lesser exports.Q) How are reading into June quarter results of India Inc.?
A) The June quarter results were marginally ahead of estimates with earnings growth of 8% (as against 5% expectations) for the NIFTY 50 companies. While sectors like IT and BFSI were lower than expectations, other sectors like Capital goods, Cement, and Chemicals have delivered strong numbers.
Overall, after a relatively flat earnings growth in the fiscal year 2025, we are hopeful of earnings growth rebounding in the fiscal year 2026, helped by various proactive fiscal and monetary stimulus measures.
Q) What is you call on valuations? We have some moderation from all-time highs but can we say that we are in the attractive zone?
A) Current valuations are in line with historical averages. NIFTY50 index has remained flat in the last one year despite global uncertainties and risk of growth slowdown.
Markets have gone through a healthy time correction of one year and if one is willing to look beyond near-term uncertainty and volatility, markets are attractive for any medium to long-term investors.
Q) Foreign institutional investors have unleashed a brutal $4.17 billion selloff across five key sectors in July. FIIs turned net sellers to the tune of Rs 17,741 crore last month. Should Indian investors be cautious?
A) While FPI selloff in July reflects recent events like geo-politics, tariff situation and other global uncertainties, the Indian market remains fundamentally strong with robust domestic demand and policy support.
Further, this is not the first time we are witnessing selling by FPIs, we have seen similar times in the past and markets have delivered strong returns over the years.
Investors should stay focused on long-term trends and avoid knee-jerk reactions to short-term outflows.
Q) Retail investors have played an important role in holding the market. But rising risk could pose a threat? From retail perspective, do you agree that money could start moving towards fixed income space as volatility grips D-Street?
A) Effective asset allocation is key for any portfolio. Over the past year, the RBI MPC has cut interest rate by around 100bps and as a result fixed income funds have given higher return than major equity indices, but this doesn’t guarantee the same pattern will continue in the coming year.
It is important to stay disciplined with asset allocation, as equity tends to outperform fixed income over the medium to long-term.
Q) Which sectors are looking attractive?
A) The recent quarterly results were broadly in line with expectations and for the full year we expect Nifty50 to deliver low double-digit earnings growth.
In terms of sectors, we continue to like domestic-facing sectors and companies. We like sectors such as Consumer Discretionary, Industrials, Healthcare, Cement and BFSI.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)