Talking to ET Now, Sinha mentioned it will be “myopic” to guage market response within the quick time period because the tariff negotiations between India and the US will probably be a long-drawn course of. “Even after negotiations, we’re taking a look at tariffs of 20–25% in comparison with a median of three% previous to the Trump regime. This may have a long-lasting impression on company earnings,” he famous.
Whereas warning of “fragmentation and protectionism” impacting commerce and capital flows, Sinha maintained that traders ought to align with structural home themes. “We have to be very cautious, however inside consumption, autos, e-commerce, and renewables, alternatives are rising regardless of world headwinds,” he mentioned.
Slowdown in company progress
Company topline progress for non-financial corporations has already slowed to three.8–3.9% within the first quarter, with sectors like shopper items, autos, and engineering witnessing deceleration. “Excluding BFSI, most sectors have delivered adverse returns over the previous 12 months. Revenue progress, which averaged 20% until 2024, has now slipped to five% in latest quarters. The trajectory forward seems to be modest,” Sinha cautioned.
He highlighted that whereas the federal government is making an attempt to counterbalance the shocks via GST reforms, price cuts, and consumption-linked incentives, fiscal constraints may restrict infrastructure spending. “Capital items have already corrected by 12–13% over the previous 12 months, and with contracting tax revenues, authorities capex might take a backseat,” he mentioned.
With round Rs 1,60,000 crore in tax income shared between state and central governments, a GST discount may impede authorities spending, slowing infrastructure funding that has been secure for the final six to seven years. As tax revenues decline, GST collections are additionally anticipated to fall, limiting the federal government’s capability for vital capital expenditure on infrastructure and sure slowing industries reliant on authorities spending.
Sectoral Outlook
On the sectoral outlook, Sinha pointed in direction of home consumption performs as the largest beneficiaries. “Autos, shopper sectors, and to some extent pharma, which stays exempt from tariffs, will acquire from GST reductions and household-focused measures. Traders are already rotating from BFSI into consumption-driven sectors,” he defined.He additionally recognized renewable vitality, e-commerce, and auto ancillaries as promising alternatives. “The photo voltaic vitality area is seeing aggressive exercise. E-commerce may gain advantage from a consumption enhance, whereas auto ancillaries stand to realize from decrease tax charges. Submit-March 2026, with the expiry of the compensation cess, autos particularly might get additional reduction,” Sinha added.
