The 50% US tariff, in near term, will lead to a drop in revenues and margins for Indian exporters even as they find new geographies to divert the production meant for US markets," said Jaspreet Arora, CIO at Equentis Wealth in an interview to Moneycontrol.
On other side, according to him, tariff would also lead to a spike in inflation in US in the medium term given a part of the tariffs would be passed on.
With the tariff event behind, investor’s focus will now shift back to earnings growth momentum of different sectors with special focus on domestic facing, he believes.
Do you expect significant growth headwinds now that the additional 25% tariff would remain in place?
The additional tariffs post implementation would have multiple and long lasting impacts:
1. In near term, it will lead to a drop in revenues and margins for Indian exporters even as they find new geographies to divert the production meant for US markets. It would also lead to a spike in inflation in US in the medium term given a part of the tariffs would be passed on.
2. With the diplomatic discussion continuing, a rollback of the penalty in the coming months will benefit the most impacted sectors of textiles, gems & jewellery, seafood, handicrafts, leather & footwear. Till then investor’s interest will be on companies which focus more on domestic consumption. This further gets accentuated with the upcoming GST cuts and festive season expectations.
3. The base tariffs of 25% are here to stay and is the new normal. Exporters will recalibrate their strategy and importance of regional diversification will be at the core. Also with the tariff event behind us investor’s focus will now shift back to earnings growth momentum of different sectors with special focus on domestic facing.
4. While the government is preparing to explore ways to provide relief to exporters what is equally exciting to watch out for will be what reciprocal tariffs is put on US imports.
Do you expect the consumption theme to outperform capex in the coming quarters? Does this mean you are overweight on the consumer sector?
There is a clear policy tilt towards boosting consumption, with recent tax cuts for the middle class, repo and CRR reductions, and supportive GST reforms. The GST changes alone could add 35–70 bps to FY27 GDP growth, translating into a $12–13 billion boost to consumption, assuming 65% of household savings flow into spending. However, the fiscal trade-off is that lower revenues may constrain government capex, with defence spending likely preserved but other segments slowing.
Private capex, too, seems unlikely to accelerate in the near term as corporates remain focused on cash conservation, buybacks, and improving return ratios over fresh investments. In the near term, consumption is likely to outperform capex as a theme.
Even after factoring in Q1 numbers, along with tax cuts, and interest rate deductions, do you think it will still be challenging to achieve double-digit earnings growth in the remaining quarters of this financial year?
Nifty reported ~6% YoY PAT growth in Q1 FY26, marking the fifth straight quarter of single-digit earnings. FY26 Nifty EPS is projected to grow 9–10% YoY. While double-digit growth remains challenging, it is achievable. Key tailwinds include improving consumption supported by GST cuts and rural recovery, timely tax reform execution, monetary easing, rising private capex, and export momentum. However, risks such as weak rural demand, policy delays, global headwinds could hinder growth. Sustained execution on reforms and macro stability will be critical to meeting earnings expectations in the coming quarters.
Do you believe any market rally from here on will be driven purely by hopes of an earnings revival in second half, especially after the expected GST reforms, monetary easing and tax cuts?
Current market optimism largely reflects expectations of an earnings revival in H2 FY26, following a muted Q1 FY26 performance. Equity markets typically price in earnings 6–9 months ahead, and the prevailing sentiment centers on a rebound in consumption driven by GST rationalization, monetary easing, corporate tax relief and the potential rollout of the 8th Pay Commission from January 2026. These factors underpin investor confidence, although execution risks remain a key watchpoint going forward.
Do you anticipate a strong pipeline of IPOs, QIPs, and promoter stake sales in the coming quarters?
In the next few quarters one can expect a busy primary and secondary equity market, provided broader sentiment holds firm. Inflation has dipped to multi-year lows, RBI has front-loaded rate cuts and eased liquidity, while GST rationalization and government capex are expected to spur consumption. H1 CY25 showed clear progress over H1 CY24, with 26 IPOs raising Rs 52,200 crore compared to Rs 29,607 crore, marking a 76% YoY growth.
Momentum has further accelerated since May 2025. Approvals worth Rs 1.15 lakh crore are already done, and another Rs 1.43 lakh crore await SEBI clearance, creating a robust Rs 2.6 lakh crore pipeline. Moreover, many PE/VCs funds nearing their maturity may not like to miss the chance to exit amidst positive sentiment and thus H2 looks set for strong primary market action.
Do you expect the real estate sector and related themes to perform well during the festive season?
The festive quarter has historically been the strongest period for real estate, supported by cultural factors and positive buyer sentiment—and this year is expected to follow suit. Residential demand remains resilient, with presales of the top 20 listed developers rising over 35% YoY in Q1 FY26, driven by favourable interest rates, rising disposable incomes, urban premiumization, and over 100% YoY increase in new launches. Demand for building materials like steel and cement is expected to remain strong while that of tiles, sanitaryware, PVC pipes, electrical goods, paints may continue to remain sluggish.
Do you think competitive intensity in the quick commerce space is easing? If so, do you believe this will help support margins for quick commerce players?
The quick commerce space remains highly competitive, with major players like Blinkit, Zepto, and Swiggy Instamart battling aggressively alongside new entrants like Flipkart Minutes, BBnow, and Amazon Now. Rapid expansion of dark stores and ambitious delivery targets are driving this fierce competition, putting pressure on margins. While companies are working to enhance unit economics and operational efficiency, their main focus is still on capturing and maintaining market share. As a result, despite efforts to improve profitability, the intense race for market dominance continues to restrict margin growth for the time being.
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