Daily Voice: Global geopolitical and trade tensions have eased, but risks persist, says Puneet Sharma of Whitespace Alpha

Puneet Sharma is the CEO & Fund Manager at Whitespace Alpha

According to Puneet Sharma of Whitespace Alpha, global geopolitical and trade tensions have cooled globally, but risks haven’t vanished.

"We’re still navigating through interest rate pivots, commodity supply shocks, and shifting trade policies. Domestically, early signs of credit tightening and fiscal discipline will require careful watching," he said in an interview with Moneycontrol.

In the June policy meeting, he believes it’s increasingly likely that the RBI continues on its accommodative path. "A third cut wouldn’t surprise us — if anything, it would align with the recent trend of policy support returning gently," said the CEO & Fund Manager at Whitespace Alpha.

Are you bullish on the financial services sector?

We’re constructive on parts of the financial sector, but we tread carefully. After a strong rally, the sector does look well-positioned, especially with the RBI’s policy stance softening and liquidity improving. Credit growth is healthy, and many players have cleaned up their books in recent years. But like any sector riding a wave, it pays to be selective.

Within financials, we lean toward institutions with strong capital adequacy and robust margins, while hedging exposure to avoid concentration risk. We prefer to harvest alpha from within the sector rather than paint with a broad brush.

Do you think the market is overvalued after the recent sharp rally, or do you see more steam left?

There’s no doubt the markets have had a good run. Valuations are no longer on the cheap side, and several indicators suggest that optimism is already priced in. But markets rarely move in a straight line. Sometimes, it’s not about whether the steam is left — it’s about how you channel it.

With easing geopolitical tensions and reduced concerns over the US-China trade war, what challenges do you foresee for the market in the remainder of 2025?

Calmer waters are always welcome — but sometimes, it’s the undercurrent that matters more than the surface. While tensions have cooled globally, risks haven’t vanished.

We’re still navigating through interest rate pivots, commodity supply shocks, and shifting trade policies. Domestically, early signs of credit tightening and fiscal discipline will require careful watching. If anything, the path ahead calls for more agility than aggression.

Do you expect the RBI to deliver its third rate cut of the year in the June policy meeting? Any forecast changes?

It’s increasingly likely that the RBI continues on its accommodative path in June. Inflation has been tamed well below its target, and with global central banks pivoting, the RBI now has room to ease a bit more. A third cut wouldn’t surprise us — if anything, it would align with the recent trend of policy support returning gently.

As for growth and inflation forecasts, we wouldn’t be surprised to see a subtle reset — not a downgrade, but perhaps a recalibration that reflects a more measured view.

Do you expect a significant change in India’s trading landscape following the conclusion of trade deals with the United States and others?

Trade deals don’t change the game overnight — but they do shift the playing field over time. The new pacts, especially with the US and UK, are encouraging. They unlock long-term opportunities for Indian exporters in auto, pharma, IT services, and more.

Of course, every door that opens might also invite more competition. Our job is to anticipate those shifts and stay one step ahead.

We see these deals as positive, but we don’t overplay the headlines. Change happens slowly, and that’s precisely when long-term alpha can be quietly captured.

After reviewing March quarter earnings, do you strongly believe that FY26 will begin on a strong note?

The March quarter had its moments — some sectors beat expectations, but overall, it wasn’t a blockbuster season. Guidance from management teams has been measured, not euphoric. And that’s a good thing.

Markets, like businesses, need time to catch their breath. FY26 might not begin with fireworks, but it doesn’t have to. A steady start, supported by improving balance sheets and stable margins, could set the tone for a more durable growth cycle.

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