Daily Voice: FIIs spot value in four sectors; India-US trade talks may cap tariffs below 20%, says UTI Alternatives' Rohit Gulati

The September-quarter earnings season has been broadly positive for India, which reflects encouraging signs that the earnings cycle in India may be turning the corner, underpinned by improving demand, margin support and better top-line growth.

As the cycle matures and we move into H2 FY26, watching for an uptick in private capex, improvement in global demand, and sustained margin expansion will be key to confirming the turning point.

Considering the positive signals from Trump, do you think India and the US are close to finalizing a trade deal?

Given the recent positive indications from President Trump, the US–India trade deal appears to be nearing finalization. Negotiations suggest that tariff levels may be capped at under 20 percent, reflecting purposeful accommodation from both sides.

A formal announcement is expected before the holiday season. Notably, India has signalled willingness to ease market access for select US agricultural products, which has helped accelerate progress towards the deal.

How are foreign portfolio investors viewing India from an investment perspective? Which sectors do they see value in?

Foreign portfolio investors remain constructive on India, supported by strong macro fundamentals—robust domestic demand, fiscal discipline, a stable currency, and a young, expanding workforce that underpins long-term growth. They see value in financial services, technology, consumer goods, and manufacturing, supported by rising domestic demand and government reforms.

Renewables and infrastructure are also gaining traction as India pushes for sustainability and industrial expansion. Overall, FPIs increasingly view India as a structural, multi-decade opportunity rather than a short-term tactical trade.

Do you expect India to deliver a positive surprise in terms of earnings and economic growth in 2026?

Nifty 50 earnings are expected to remain on a steady growth path, with Q2 FY26 results and current forecasts pointing to full-year EPS growth in the 8–10 percent range. This reflects a stable, resilient earnings cycle rather than a sharp acceleration.

On the macro front, India’s economic outlook remains strong, with FY26 GDP growth expected to stay in the mid 6 percent range, supported by robust domestic demand and improving rural momentum.

Do you see a strong IPO pipeline emerging in India in the coming years? What could be the potential fundraising amount through IPOs?

India is clearly witnessing the emergence of a strong IPO pipeline over the years. With improving market sentiment, sustained domestic liquidity, and deepening institutional participation, the primary market is positioned for healthy activity.

From Rs 62,000 crore in FY24 to Rs 1,62,000 crore in FY25, the IPO market has shown significant growth in the previous years. Early estimates suggest that annual fundraising through IPOs could meaningfully exceed recent averages, potentially approaching the Rs 2–3 lakh crore range as more large and mid-sized companies tap the markets. Overall, the environment remains supportive for a robust IPO cycle through 2026.

What could be the key risk factors for Indian equities in the year ahead? Could wage growth and employment trends pose a risk?

Key risks for Indian equities in the year ahead include a softer global growth environment, geopolitical uncertainties, and the potential for sentiment-driven market corrections.

Domestically, while wage and employment trends remain supportive of consumption, any unexpected shifts could influence cost dynamics and inflation. Overall, maintaining vigilance is important even as India’s structural outlook stays favourable.

What are the key investment themes to focus on in India?

Key investment themes in India continue to centre around strong domestic demand, an ongoing capex and manufacturing cycle, and rapid digitization of the economy. A young workforce, rising incomes, and supportive policy reforms further reinforce these structural trends, positioning India for sustained multi-year growth.

Do you expect the US Federal Reserve to implement one more rate cut before the end of 2025?

At this stage, the likelihood of another Fed rate cut before the end of 2025 remains balanced. The Fed continues to signal a data-dependent approach, and unless we see a more pronounced easing in inflation or a meaningful softening in the labour market, policy may remain on hold. A cut is possible but not yet assured.

How do you see the growth in AIF sector after analysing the trend and changes since the launch?

AIF industry is witnessing rapid growth, with 36 percent growth in investments made by AIFs from September 2024 to September 2025, and funds raised growing at 27 percent, compared to a 13 percent growth for mutual fund AUM during the same period. An even more compelling statistic is the funds raised by AIFs through domestic investors, which grew at 40 percent.

Clearly, the domestic investors are loving the flexibility and opportunities offered by AIFs. Over the last few years, this growth has been driven by equity, both listed and unlisted.

The next stage of growth is likely to come from private credit, which provides the benefit of absolute returns with low volatility. In the US, for instance, as per a recent report by the Fed, private credit AUM has grown at a CAGR of 15 percent in the last five years, whereas market participants estimate a single-digit growth for private equity in the same period.

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