Daily Voice: Market sentiment unlikely to improve until three key factors stabilise, says Alpha Capital’s Pankaj Kumar

• In nominal terms, there will be double-digit growth, but in real terms double-digit growth looks tough
• India in slightly better position after the verdict as it faces a lower tariff of 15%
• Incertainties related to tariffs will definitely persist

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According to Pankaj Kumar, the Partner and Fund Manager at Alpha Capital, the markets may remain volatile in short term due to global uncertainty such as Iran war, uptick in oil prices, and trade tariff.

Once these things stabilize then the markets will see positive movement, he said in an interview to Moneycontrol.

He believes in nominal terms, there will be double-digit growth, but in real terms double-digit growth looks tough. "To achieve this, all sections of economy need to fire simultaneously. Manufacturing, service, agriculture, and private capex have to continuously grow beyond single digit and global uncertainty has to subside," he said.

Do you think India is in a better position, considering the continuation of the original tariffs in some form after the Supreme Court verdict? Also, do you expect greater flexibility in future trade actions?

India is in slightly better position after the verdict as it faces a lower tariff of 15%. This has also given some leverage to India to reassess what it gives in return and in case of any circumstances change then it must be recalibrated to maintain balance. It also gives India the leeway to design its own path for energy efficiency.

We should also keep in mind these trade tariff are pretty fluid. The next 150 days, before the Section 122 clock runs out, are critical for converting that leverage into a durable bilateral trade framework.

Net-net, after the Supreme Court verdict and Trump’s 15% tariff rate, do you believe capital will eventually start flowing into India?

It is too early to say, but definitely you will see some capital inflows start happening in India, the inflows would be bifurcated across sector focused such as Tech, AI Infrastructure and some FDIs in other sectors.

When the global environment becomes more predictable & as our policies become more investor friendly then we will definitely receive good inflows.

Do you think tariff-related uncertainties will persist? If yes, what would be your preferred strategy — domestic-focused plays or export-oriented sectors?

Yes, uncertainties related to tariffs will definitely persist. Domestic focussed play is better place to be as we are seeing revival in earnings, valuations have also become reasonable when compared to one and half years back.

Do you expect delays in investments and capex due to the lack of clarity on tariffs?

Yes, there can be delays in private capex as capex expansion depends on many factors such as demand uncertainty due to tariffs, and raw materials prices fluctuations.

Do valuations in the private banking sector remain attractive?

Private banking has been seeing steady growth, earnings have improved last quarter, credit growth has also shown some signs of uptick, the banks have seen improvement in asset quality, credit cost remains under control.

Are you confident about the likelihood of double-digit GDP growth in FY27?

In nominal terms we will touch double-digit growth, but in real terms double-digit growth looks tough. For us to achieve this, all sections of economy need to fire simultaneously. Manufacturing, service, agriculture, and private capex have to continuously grow beyond single digit and global uncertainty has to subside.

Is earnings growth momentum misaligned with current market valuations?

Indian markets are experiencing classic sentiment-earnings disconnect. Earnings growth was good last quarter, is expected to be good next quarter, GDP just printed strong, and the RBI rate cut cycle is a tailwind. None of that is being rewarded right now — because an IT sector narrative that has been extrapolated well beyond its logical endpoint is weighing on the Nifty index mechanically, while global uncertainty is keeping FII risk appetite suppressed.

Do you think the market may remain range-bound in the short term? What could be the possible triggers to break out of this range?

Yes, markets may remain volatile in short term due to global uncertainty such as Iran war, uptick in oil prices, and trade tariff. Once these things stabilize then we will see positive movement in markets.