“The market knew very well that there is no change happening and 50% is coming in. So, not much pain is left on the tariff front,” he said.
With the tariff uncertainty easing, investors are refocusing on domestic triggers. A series of key events are coming up, starting with the monthly expiry, followed by Reliance Industries’ annual general meeting, and importantly, the GST Council’s group of ministers meeting in early September.
Market expectations are high that the government may announce changes to tax slabs to encourage spending. Bagga believes that even before these changes happen, the anticipation alone could spark stock-specific rallies.
“You could see FMCG stocks rising ahead of the meeting on expectations of lower GST on essentials. Durables and autos could also benefit if rates are cut,” he explained. However, he warned that certain items like toothpaste are unlikely to see price changes, which limits potential gains for those companies.
On the export front, Bagga pointed out that while textiles are already struggling due to the tariff hike, uncertainty still affects other sectors like gems, jewelry, pharma, and electronics. Although pharma has been exempted for now, he highlighted the risk of sudden policy changes.“Pharma and electronics face a $35 billion challenge. But India is the lowest-cost producer of generics, and there are no real substitutes available. Most companies have already shipped months of supplies in anticipation, so the immediate impact may be limited,” he said.Turning to consumption trends, Bagga expressed cautious optimism. He observed that staple goods, which usually command high valuations for their stability, have seen sales decline in recent years. However, with rising demand from rural areas, strong monsoon rains, and increased welfare spending, conditions could be favorable for a recovery.
“There is a pickup coming in FMCG. Rural India is doing well, and urban spending could improve with GST cuts. So, staples are worth considering again,” he suggested.
Regarding high-valuation internet and e-commerce companies, Bagga recognized the risks but noted that growth prospects still keep investors engaged. “There will be a shakeout at some point, as seen in China, but for now these businesses remain on a growth path, and fund managers are willing to pay a premium for that,” he added.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)