MC EXCLUSIVE MC Exclusive: Sunil Singhania on the Wealth Formula: High tariff not base case; second half earnings could surprise on low expectations

Singhania sees sees better prospects in discretionary consumption, particularly autos

The market may stage a recovery in the second half of the fiscal year as earnings momentum improves, aided by government stimulus, monetary easing, and stronger rural consumption, according to veteran investor Sunil Singhania.

“The second half should surprise on low expectations,” Singhania said in an interview on the Wealth Formula podcast with Mahalakshmi. “December and March we are very hopeful of a significant turnaround largely because of the whole impact of this stimulus—lower taxes, lower interest rates and the 10 lakh crores of liquidity being infused.”

Corporate earnings are already showing signs of improvement. Overall profit growth was about 9–9.5% in the June quarter, while September will “optically look good” given the weak base last year. “December and March should see a significant turnaround,” Singhania said.

The equity market has been largely rangebound since the post-election rally in mid-2024. The Nifty 50 hit a record 26,000 after the vote but has delivered flat returns over the past year, pressured by a high base, weak corporate earnings, and multiple headwinds. These included delayed budget allocations, which slowed economic momentum, and external shocks such as regional conflicts between Israel and Iran, as well as India and Pakistan.

WATCH INTERVIEW HERE: Sunil Singhania on Finding Under-Researched Stocks, Bold Calls, GST & Tariff Impact

“Despite multiple headwinds, we have been resilient as an economy,” Singhania said, adding that “80–85% of the headwinds are behind us.”

Policy support has been central to the improving outlook. The government has cut income tax and GST by a combined two lakh crores, while the Reserve Bank of India has infused more than eight lakh crores of liquidity and delivered 100 basis points of rate cuts. Together, these measures amount to nearly 20,000 crores a month in additional liquidity for consumers, boosting spending power, Singhania said.

Besides, he said, rural demand is looking up too. Tractor sales are rising at 20–25%, agrochemicals are seeing strong growth, and favorable monsoons are expected to lift farm incomes. Consumption in Tier-3 and Tier-4 towns is gaining traction, while the upcoming festive and wedding season should further support sales.

He said US tariffs will settle lower from the current levels, which are unreasonable. India had been expected to settle at around 15% duties but instead faced 25%, followed by another 25%. “At the margin it can be 40, 30, 20, depends on how egos and politics play rather than economic decisions,” Singhania said, while expressing confidence a resolution could come within weeks or months.

He called the tariffs are largely "posturing" noting that India has an FTA with the UK and that the German foreign minister is in India to discuss an EU-India FTA, which signals a shift in global sentiment. Singhania believes it's "a matter of time" before a resolution is reached, possibly bringing the tariff down to 25 percent. “Tariffs continuing at these levels is a 2 to 5% probability and certainly not our base case,” he said.

Extent and impact of job losses

Addressing concerns about job losses, Singhania said he is "not of the camp that we'll have job losses." He believes recent job cuts are an "aberration," largely affecting labor-intensive sectors hit by the 50 percent tariffs on garments, textiles, shoes, and jewelry, but remains hopeful that the pain will go away when tariffs normalize. He also dismissed fears that AI would lead to widespread job cuts. He argued that AI implementation itself requires people and that companies might "hire fewer people" at the margin, but not necessarily cut existing jobs.

Singhania stressed that the government remains determined to reach its 7% GDP growth target. “They will do everything to help achieve that target,” he said.

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