Even after GST 2.0 reforms, according to Saurabh Rungta, the CIO at Avendus Wealth Management, the reform momentum is likely to continue, whether in taxation, manufacturing incentives or deeper financial sector development.
"These incremental reforms are vital for sustaining India’s 6-7% growth trajectory and reinforcing investor confidence," he said in an interview to Moneycontrol.
He believes double-digit earnings growth looks achievable in FY27. "Banking, industrials, manufacturing-linked sectors and select consumer categories are well-positioned to deliver," he said.
Are valuations and market positioning now turning favourable for India?
While India continues to stand out as one of the most resilient equity markets globally, the last one-year’s returns pale when compared to those of global alternate opportunities like the US, emerging markets, developed markets etc. Valuations are no longer cheap, but they look more reasonable when seen in the context of India’s structural growth premium.
Domestic flows remain strong, but global investors re-engaging is required. Moreover, in the near term, markets wait for clarity on global cues, especially the Indo-US relationship, before taking a more definitive turn. However, the medium-term positioning remains favourable.
Do you strongly anticipate a healthy earnings growth of around 15–18% in the next fiscal year?
Yes, double-digit earnings growth looks achievable. Banking, industrials, manufacturing-linked sectors and select consumer categories are well-positioned to deliver. The corporate deleveraging of the last decade, stronger balance sheets, government-led capex, policy reforms including last year's tax cuts, GST reforms and Make in India drive are supporting this cycle.
While near-term global uncertainty remains, the breadth of earnings recovery across sectors will be key to provide the markets the much-required confidence.
Does the GST rate rationalisation suggest that the downside risk is now significantly limited for the market?
The GST rationalisation sends a strong positive signal, as it simplifies compliance, supports consumption and improves government revenues over the long term as volume growth starts to outpace the impact of lower rates.
Markets generally reward such policy clarity. While downside risk cannot be completely eliminated given global factors, domestic reforms like these create a cushion and reinforce India’s relative stability compared to peers.
Do you foresee a strong rebound in consumption and a bumper Diwali season following the GST rate rationalisation?
Consumption is likely to benefit, but the impact may be more visible in FY26 than immediately. Rural recovery, improved real wages and festive spending momentum will add to the optimism.
A bumper Diwali season is surely on the cards, but more importantly, GST rationalisation underpins a steady consumption recovery over multiple quarters.
Do you still expect the RBI to consider further monetary easing to mitigate the impact of tariff-related headwinds?
The RBI has balanced inflation and growth well. However, with global uncertainties, significant rate cuts are unlikely in the near term. Instead, we may see the RBI rely more on liquidity tools and targeted measures rather than broad monetary easing.
Stability rather than aggressive cuts remains the most probable stance. That said, if the US Fed cuts rates sharply, it could create some additional room for the RBI to ease.
Following the GST rate rationalisation, do you expect the government to introduce more such reforms to sustain 6–7% economic growth and boost corporate earnings?
Yes, reform momentum is likely to continue, whether in taxation, manufacturing incentives or deeper financial sector development. These incremental reforms are vital for sustaining India’s 6-7% growth trajectory and reinforcing investor confidence. Over time, such measures also deepen capital markets and broaden participation, which is essential for translating macro growth into wealth creation.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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