The Indian stock market is cautiously optimistic about a potential US trade deal, says Vipul Bhowar, Senior Director and Head of Equities at Waterfield Advisors.
"Resolving trade matters is crucial for boosting market sentiment and attracting foreign investments," he said in an interview with Moneycontrol.
Without a favourable agreement, the market may remain volatile and exhibit limited upward movement, he added.
To support exporters impacted by the 50 percent US tariffs, the government can introduce key relief measures such as relaxing Special Economic Zone (SEZ) regulations to create a more business-friendly environment, he advised.
Has the GST rate rationalization met your expectations? Do you see it as a one-time booster or a structural growth driver?
GST is a key structural growth driver, not just a one-time boost. The recent shift to a simplified two-slab rate structure (5 percent and 18 percent) aims to lower prices, increase consumption, support MSMEs and manufacturing, simplify compliance, and expand the tax base. This makes goods and services more affordable, enhances ease of doing business, and leads to sustainable, inclusive economic growth.
Do you believe the market is unlikely to witness a sharp rally until India signs a trade deal with the United States?
The Indian stock market is cautiously optimistic about a potential trade deal, but ongoing negotiations are complex and stalled on key issues. Resolving these trade matters is crucial for boosting market sentiment and attracting foreign investments. Without a favourable agreement, the market may remain volatile and exhibit limited upward movement.
Do you expect the upward trajectory in the consumption sector to continue over the coming quarters?
The consumption sector is likely to keep growing in the upcoming quarters, bolstered by positive factors. A promising economic outlook is driven by revived rural demand and improved purchasing power from softened inflation and government welfare spending. Urban consumption is expected to stabilise due to RBI rate cuts, policy stimulus, and better credit availability.
Given the government's apparent shift in focus from capex to consumption, is it advisable to reduce exposure to the capex theme or stay invested?
The government is currently balancing its focus between capital expenditures (capex) and consumption, with noticeable shifts toward prioritising consumption growth. While there is a strong push for capex to boost economic activity and address weak private investment, recent income tax and GST cuts aim to enhance disposable income and consumer spending.
In summary, maintaining some investment in capital expenditures (capex) while increasing exposure to consumption-driven sectors aligns with the government's strategy, supporting risk diversification and potential rewards as the economy evolves.
Does the current rally in Chinese equities appear sustainable over the next six months?
The rally has been fueled by coordinated government policies in Beijing, including economic stimulus and monetary easing, which have helped Chinese equities recover from low valuations. Positive earnings momentum in sectors like healthcare, materials, communications, and financials, along with corporate earnings upgrades, has contributed to a more sustainable rally than in the past.
However, its continuation over the next six months will likely depend on consistent earnings growth and positive economic data, ensuring a meaningful recovery without excessive market speculation.
What additional reforms or policy measures would you expect from the government to mitigate the impact of the 50% US tariff hike?
To support our exporters, the government can introduce key relief measures, such as relaxing Special Economic Zone (SEZ) regulations, to create a more business-friendly environment. Enhancing liquidity support would inject vital capital into enterprises, while reducing compliance burdens would allow them to operate more efficiently. Lowering logistics costs can further ease financial pressures, enabling exporters to reach broader markets.
Additionally, fostering market diversification will help reduce reliance on the US market and build resilient supply chains for greater stability. Finally, rationalising GST rates can boost domestic consumption, indirectly strengthening demand for our exporters’ products and creating a more vibrant trade ecosystem.
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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