Daily Voice | Ankita Pathak sees room for further growth reflation as monetary policy takes the baton

Ankita Pathak is the Head – Global Investments at Ionic Asset

• With key trade deal with US now behind, strain on INR could likely alleviate
• Domestic growth levers stay resilient but key challenges for economy stemming from external environment
• Believe valuations remain high compared to EM basket

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“Friday’s MPC decision came in line with our house view, following a notably dovish policy stance in December 2025. However, the absence of definitive liquidity measures disappointed markets,” said Ankita Pathak, Head – Global Investments at Ionic Asset, in an interview with Moneycontrol.

She believes there is still scope for further growth reflation, with the baton now in the hands of monetary policy, as fiscal policy prioritises stability and fiscal consolidation.

While domestic growth levers remain resilient, she noted that key challenges to the economy stem from the external environment—particularly geopolitical tensions—which are impacting capital flows, exports, and market sentiment.

What is your take on the RBI’s monetary policy? Do you expect a status quo on interest rates throughout the current year, with a focus on liquidity?

Friday’s MPC decision came in line with our house view, following a notably dovish policy in December 2025, although the absence of definite liquidity measures disappointed markets. We believe that there is still scope for further growth reflation, with the baton now with monetary policy, as fiscal policy prioritizes stability and fiscal consolidation.

Also, with the key trade deal with the US now behind us, the strain on INR could likely alleviate, with foreign capital potentially returning to India and export pressures easing.

With this hypothesis, we believe the RBI while remaining vigilant about the evolving macroeconomic environment, should continue prioritizing growth reflation with further rate cuts and sustained an adequate liquidity infusion. There’s already space available from inflation, growth, fiscal and currency angle, and US rate cuts could provide further tailwinds.

Has the central bank flagged any major challenges for the economy?

While the domestic growth levers stay resilient, key challenges for the economy are stemming from the external environment, particularly, geo-political tensions, impacting capital flows, exports and market sentiments. With a favourable trade deal with the US now behind us, external drivers of domestic growth should receive meaningful support.

As we approach the close of the December quarter earnings season, what is your reading of the numbers announced so far? Do you see any strong signs of an earnings recovery?

Slightly over half of the NSE 500 companies have reported results so far, with adjusted PAT growing by 12% YoY. Market cap wise results show strong resilience in the small cap companies, with PAT growing by ~40% YoY, followed by mid cap at ~18% and large cap at ~9%. Surely the earnings are improving and so are macros which should further support earnings in the coming quarters.

Additionally, a favourable trade deal with the US + increasing currency competitiveness vis-à-vis CNY could act as a tailwind for export-oriented companies going forward. Having said that, we believe valuations remain high as compared to the EM basket and return of FPIs would be crucial for a based recovery of the market.

Do you expect another major market move once participants gain clearer insights into the US trade deal?

Any deviation in the fine print from the initial announcement could lead to increased market volatility. TACO trade is a possibility given how trade deals with other countries have been revised multiple times, however, this is not our base case.

We believe President Trump would likely uphold the terms of trade with India, considering how long it took for both countries to reach a mutually beneficial consensus.