Himanshu Kohli of Client Associates believes India stands to benefit significantly from a bilateral trade agreement with the US.
According to him, the agreement would boost exports in key sectors like IT, pharmaceuticals, textiles, and engineering while attracting more US investment in manufacturing, clean energy, and defense. The deal could accelerate technology transfer, enhance innovation, and create millions of jobs.
Given the ongoing tariff war, the Co-founder at Client Associates feels the most likely scenario for the US is a slowdown rather than a full recession.
"Consumer spending, which drives about two-thirds of US GDP, remains relatively strong, supported by a resilient labor market and wage growth, though signs of cooling are emerging," he said.
Do you believe India will benefit the most from a bilateral trade agreement?
Yes, India stands to benefit significantly from a bilateral trade agreement with the US. It would boost exports in key sectors like IT, pharmaceuticals, textiles, and engineering, while attracting more US investment in manufacturing, clean energy, and defense. The deal could accelerate technology transfer, enhance innovation, and create millions of jobs.
It would also strengthen India’s position in global supply chains and reinforce its strategic partnership with the US. As both economies complement each other, such an agreement would support India’s growth ambitions and global economic standing, making it one of the biggest potential beneficiaries among developing nations.
What is your top preference — NBFCs or banks — considering the gradually changing economic environment?
In a gradually improving economy with stable inflation and rate normalization, a mix of both might be optimal — core exposure to strong banks for stability and selective NBFCs for alpha.
If you're looking for stability and long-term compounding:
Banks (especially strong private sector ones like HDFC Bank, ICICI Bank, etc.) are more attractive due to consistent margins, improving credit quality, and robust governance.
If you're seeking high growth and can stomach volatility:
NBFCs can deliver better short-to-medium-term returns in a growing economy, especially those focused on underserved sectors (e.g., Muthoot Finance, Bajaj Finance).
Do you still have a strong view on the power sector?
The power sector in India remains highly attractive due to several strong structural trends. Electricity demand is growing rapidly, driven by industrial expansion, urbanization, and higher household consumption, especially with the rise of cooling needs, electric vehicles, and digital infrastructure. To meet this surge, the government is aggressively investing in both renewable and traditional energy sources, targeting 500 GW of non-fossil fuel capacity by 2030. Policy support is robust, with schemes like the RDSS improving the financial health of power distribution companies (DISCOMs), and incentives for solar manufacturing boosting domestic capacity.
Additionally, energy transition opportunities are expanding. Companies are moving into new areas like battery storage, smart grids, and EV charging, opening fresh revenue streams. Financial reforms are making the sector more efficient and sustainable. Large integrated players like NTPC and Tata Power, renewable specialists like Adani Green, and transmission leaders like Power Grid Corporation stand to benefit.
Overall, the combination of surging demand, policy momentum, technology adoption, and improving sector health positions India’s power sector for long-term growth. It offers a strong mix of stability and innovation, making it a key theme for investors looking at India’s economic transformation and global clean energy trends.
Do you think valuations are still expensive in the FMCG space? Does that mean it’s better to stay away from the sector for now?
The FMCG sector, despite high valuations, continues to offer several positives for investors. These companies provide strong brand equity, consistent cash flows, and resilient business models, making them attractive during periods of market uncertainty. With raw material inflation easing, margins are expected to improve, supporting better profitability in the coming quarters. Additionally, rural demand, which had been under pressure, is showing signs of recovery, offering further growth potential for companies with deep rural penetration.
FMCG firms are also focusing heavily on innovation, premiumization, and digital expansion to drive future growth. Many are launching new products, strengthening direct-to-consumer channels, and investing in supply chain efficiencies. Their ability to pass on price increases without major volume loss also reinforces their pricing power.
Overall, while valuations are rich compared to historical averages, the sector’s defensive nature, earnings visibility, and long-term consumption story in India remain compelling. For investors seeking portfolio stability, especially during volatile economic phases, FMCG can still play an important role. A selective approach — focusing on companies with strong rural presence, margin recovery potential, and new growth initiatives — can help capture upside without overpaying. Thus, FMCG remains a solid, but slightly cautious, investment theme.
What is the most likely scenario in the United States — a recession or a slowdown — given the ongoing tariff war?
The most likely scenario for the United States, given the ongoing tariff war, is a slowdown rather than a full recession. Consumer spending, which drives about two-thirds of US GDP, remains relatively strong, supported by a resilient labour market and wage growth, though signs of cooling are emerging. The impact of tariffs has been more sector-specific, mainly affecting manufacturing, agriculture, and certain export-import businesses, while large sectors like services, healthcare, and technology continue to show stability.
Moreover, the Federal Reserve’s flexible approach to monetary policy provides a safety net; it is prepared to adjust interest rates or inject liquidity if necessary to prevent a sharp downturn.
However, risks remain. A prolonged or escalating tariff conflict could dampen business confidence, slow investments, and eventually weaken consumer sentiment. If these pressures intensify, the possibility of a shallow recession cannot be entirely ruled out.
Overall, barring a major external shock, the US economy is more likely to experience moderated GDP growth of around 1–2 percent rather than a severe contraction. Vigilance is necessary, but the fundamentals still point toward a slowdown, not a collapse.
What are the key challenges for the equity market going ahead, which has recorded a stellar performance in the recent past?
The equity market, after a stellar performance, faces several key challenges ahead. First, valuations across many sectors, especially midcaps and smallcaps, have stretched beyond historical averages, leaving little room for earnings disappointments. Sustaining the current pace of earnings growth will be crucial, and any slowdown — whether due to margin pressures, weak global demand, or sector-specific headwinds — could trigger corrections.
Global macro risks also loom large. A slowdown in major economies like the US, Europe, or China, combined with ongoing geopolitical tensions, could increase market volatility. Although interest rates have stabilized, any resurgence in inflation could force central banks to maintain higher rates longer, reducing liquidity and hurting equity valuations.
Overall, while long-term fundamentals are intact, investors should prepare for greater volatility, more stock-specific movements, and the need for careful sector and stock selection. The market is entering a phase where quality, earnings resilience, and reasonable valuations will matter much more than simply riding the broader momentum.
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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