Daily Voice: Geopolitical and commodity risks persist, yet domestic growth stays resilient, says Divam Sharma

Divam Sharma is the Co-Founder and Fund Manager at Green Portfolio PMS

• Geopolitical developments and commodity price volatility key market risks to monitor
• Focus should be on companies that can translate policy tailwinds into sustained earnings growth rather than short-term thematic trades
• Expect Q4 earnings to show further stability to improvement

Did our AI summary help?

According to Divam Sharma, the Co-Founder and Fund Manager at Green Portfolio PMS, geopolitical developments and commodity price volatility are key market risks to monitor. However, at this point, they are not overshadowing the underlying domestic growth momentum, he said in an interview to Moneycontrol.

After India–US interim trade agreement, for long-term investors, this is shaping up to be a good phase to increase equity exposure selectively rather than remain on the sidelines, Divam Sharma believes.

The focus should be on companies that can translate policy tailwinds into sustained earnings growth rather than short-term thematic trades, he advised.

What is your take on the India–US interim trade agreement? Do you think the worst is over for the market?

The India–US interim trade agreement is a meaningful positive for markets and reinforces India’s positioning as a preferred investment destination in global supply chains. It improves visibility for exporters and manufacturers and is also supportive for foreign institutional flows.

Domestically, growth remains resilient, corporate balance sheets are strong, and earnings are gradually broadening. After the recent correction in parts of the market, valuations in several segments now look attractive from a medium-term perspective.

While geopolitical risks remain a variable, the overall setup appears constructive. For long-term investors, this is shaping up to be a good phase to increase equity exposure selectively rather than remain on the sidelines.

Do you plan to take exposure to sectors that are beneficiaries of the India–US interim trade agreement?

Yes — we are already positioned in some of the beneficiary sectors and are selectively increasing exposure where fundamentals, order visibility, and balance-sheet strength are compelling.

We are also looking at the opportunity through a broader lens — factoring in India’s wider trade engagements, the direction from the Budget, and relative valuations. The focus remains on companies that can translate policy tailwinds into sustained earnings growth rather than short-term thematic trades.

After easing trade-related concerns, what do you see as the biggest challenges and supports for the equity market going forward?

On the support side, infrastructure spending, defense manufacturing, the energy transition, and manufacturing linked to global supply-chain diversification remain powerful structural drivers. If Budget announcements continue to be executed effectively on the ground, they should further strengthen the earnings outlook.

On the challenge front, geopolitical developments and commodity price volatility are key risks to monitor. However, at this point, they are not overshadowing the underlying domestic growth momentum.

Overall, we expect volatility to persist in the short term, but the medium-term outlook for Indian equities remains firmly positive.

Are you satisfied with the Q3 earnings performance? Do you expect the earnings recovery to continue in Q4?

Q3 earnings were encouraging and broadly in line with expectations, with improving trends across several cyclical and domestic-oriented sectors.

We expect Q4 to show further stability to improvement, supported by government spending, infrastructure activity, and healthy consumption trends. A gradually broadening earnings recovery should underpin the next leg of the market.

Are you concerned about rising oil prices?

At present levels, oil prices are not a major concern. India’s macro position is relatively comfortable, and corporate margins have room to absorb moderate fluctuations.

Of course, a sharp and sustained spike in crude would need close monitoring, but it is not our base-case scenario.

Are you avoiding the IT sector after Anthropic’s launch of a sophisticated legal-focused AI tool weighed on the space?

We have been selectively underweight IT, but we view the current phase as one of transition rather than structural decline.

AI adoption is likely to reshape service models and open up new growth avenues over time. We are watching closely for companies that demonstrate the ability to pivot quickly, protect margins, and build scalable AI-led offerings. Those leaders could present attractive opportunities as the cycle evolves.