Nitin Raheja of Julius Baer believes that markets are not fully pricing in the risks of tariffs and their aftereffects.
For the Indian markets, according to him, more than the tariff’s the key trigger is going to be earnings and how much of that growth has been priced into stocks.
The revival of consumption in the festival season in the second half of the year will be another key trigger for the markets, said the Executive Director - Head Discretionary Equities Business at Julius Baer.
Do you think de-dollarization is turning out to be a positive development for India?
De-dollarization if it happens is a long term positive for India. The impact is more second order, if in the de-dollarization trend the dollar weakens relative to other countries it will work in India’s favour due to the fact traditionally India has always been a net importer specially in Oil as the largest part of the basket. This will help also lower inflation which should keep interest rates low and spur consumption.
Has the market fully priced in the tariff concerns at this point? What are the key triggers for the market in the remainder of 2025?
Given the frequent changes in the tariff policy and almost constant noise around them, the markets have started believing in the nomenclature (TACO – Trump Always Chickens Out). In that sense, it is our belief that markets are not fully pricing in the risks of tariffs and their aftereffects, as they are not able to really even understand the risks, believing it will not be as bad as it seems.
For the Indian markets more than the tariff’s the key trigger in our view is going to be earnings and how much of that growth has been priced into stocks. The revival of consumption in the festival season in the second half of the year will be another key trigger for the markets.
Do you still see a risk of earnings downgrades in select sectors, even though the worst appears to be behind us overall?
Earnings are most at risk in the IT sector and in 2-wheelers in the auto sector.
Which sectors do you expect could surprise positively on the earnings front in Q1 FY26, as well as in FY26?
The sectors that would surprise would most likely be cement and rural consumption.
Do you see a strong possibility of upward revisions to the current full-year earnings growth estimates of 12–13% in the second half of the year (FY26)?
As we stand today upward revisions to current full year earnings growth estimates looks difficult. However, the recent actions by the RBI of front loading of interest rate cuts and increasing liquidity in the system along with the increase in the tax threshold limit in the budget could show its impact with a lag of a few quarters in the second half.
Do you strongly believe that the cement sector is poised to lead earnings growth in FY26?
Yes.
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