The range for the market continues to be higher, and it seems like 25,000, at least for now, is a solid base. What do you think could actually move up from here? Any sectors you are betting big on?
Rahul Shah: As you rightly pointed out, after the big-bang GST rollout we have seen the market stabilising. There has been a lot of short covering from FIIs and cash market figures have also started moving upward. We have also seen a couple of positive days recently. Looking at the markets, it is going to be stock-specific, unlike the broad-based euphoria of the last two years. From Q1 earnings too, the story has been stock-specific. Overall, Nifty earnings—or even the broader Nifty 500—were largely in line with street and our estimates.
So, my sense is that the market will remain stock-specific. Some sectors may do well, but to give you perspective, cement looks like the clear leader of this rally. Numbers across companies—large caps and midcaps—have been robust. Cement earnings were very strong, with UltraTech leading from the front. It looks like there’s another 15–18% upside in UltraTech.
Banks are another strong pocket. ICICI, State Bank, and HDFC have all reported blockbuster numbers, and I believe they will continue to do well. Metals too, especially steel, should rebound after the safeguard duty announced by the government. Historically, whenever such actions have been taken, stocks have delivered 30–35% returns in the following year.
The domestic cycle is also improving. Along with the GST push, consumer stocks—which were laggards for the last couple of years—are now gaining traction. FMCG results this quarter show strong management commentary on rural and urban volume growth. Companies like HUL and Asian Paints are performing well.
So overall, it’s going to remain stock-specific. The market doesn’t look likely to fall much. The downside seems limited to 1–2%, supported by strong domestic macros. Of course, global noises may temporarily impact sentiment, but the overall trend looks resilient.
As you indicated, earnings momentum is expected to pick up. We now have more clarity on GST slabs. But what we still don’t know is what will happen on August 27th when the secondary round of tariffs comes into play. How should one navigate the market with this uncertainty?
Rahul Shah: Exactly—as I mentioned, global developments will create some noise and volatility. But the domestic earnings cycle and macro indicators remain strong. Coming back to the 27th, that event is anyone’s call. What we can do is focus on sectors least impacted—those driven by domestic demand.Sectors like power, consumption, retail finance, and retail credit will benefit from GST-led momentum. Autos too, especially passenger vehicles and two-wheelers, have already seen a good rally. These are safer areas to focus on amid uncertainty.
In healthcare, Apollo Hospitals has delivered solid gains and remains the go-to name. Beyond Apollo, are you seeing opportunities to buy or add positions?
Rahul Shah: The entire healthcare space has done well, including some of the recently listed names. Apollo remains the top pick—it’s reasonably valued compared to peers, and post the demerger of their online business, there will be additional shareholder value.
After Apollo, Max Healthcare is another stock we like. One can also consider small stakes in select other players.
What about life insurance plays? We saw some moves yesterday, especially after news that individual insurance rates could go down to nearly nil. But ITC, input tax credit, could be a negative. What is your view on insurance?
Rahul Shah: The financial sector overall has done very well—first banks, then NBFCs, and now insurance. Numbers have been strong across most players. SBI Life is our top pick—it delivered a solid quarter. Most insurers are guiding for single-digit growth in FY27, but valuations are already factoring this in.
Still, insurance is a good portfolio bet for 15–18% returns. Our top picks are SBI Life, HDFC Life, and Niva Bupa.
Do you think the latest news in pharma—about tariffs being less steep than feared—can be taken positively by the markets?
Rahul Shah: The overhang will remain, but yes, this news gives some breather and suggests tariffs may not be as harsh as expected. That’s positive in the near term. Larger players like Sun, Dr. Reddy’s, Cipla, etc., may not face a big impact. Still, we’ll need to wait for the final tariff structure to be announced.
What will be the next trigger for the market? Is tariff clarity now the only factor that could drive direction?
Rahul Shah: Yes, the key near-term trigger is the August 27th announcement and how steep the tariffs will be. If the existing 25% base tariff stays, the market has already priced it in and can move higher. But if additional steep tariffs are imposed, we could see more volatility.