Expert View: Ankur Jhaveri of JM Financial on trade war impact, India vs China, strategy for Indian stock market & more
When you restrict the largest global suppliers from accessing US markets, the world (except the US) should be prepared for a deflationary cycle, which will benefit consumers but negatively impact domestic players.
The second and third-order impacts would be difficult to fathom at this stage.
We see a risk to growth through the trade route, as exports have already been weak (0.1 per cent YoY in FY25).
A deterioration in India's trade balance would also drag GDP in FY26 (less than 6.5 per cent growth). Moreover, India is highly unlikely to increase its exports to the US.
On the other hand, domestic consumption could see some meaningful uptick in India, thus restricting overall impact and proving to be a great hedge for investors in these uncertain global markets.
To some extent, yes, with the 'Make in India' and PLI scheme already in place, India could leverage its dependable position and relatively better corporate governance at the country level versus China to build on its manufacturing dream/idea.
However, India still lacks scale and ease of doing business compared to China, which would act as an impediment. I believe India would be an option when the existing trend of diversifying supply chains away from China gains further pace.
In the long run, market gains are a function of earnings. I still see some room for cutting earnings estimates that align with the consensus.
That should lead to higher single-digit earnings growth in FY25, which was reflected in the nearly 4.5 per cent returns in the Nifty in FY25.
For this year, considering the heightened uncertainty around tariffs and the likely deflationary pressures due to dumping by Asian countries in the upcoming years, markets should be prepared for increased competition-led moderate earnings.
However, Indian markets could gain from the flux of sudden liquidity, especially from foreign investors, given their positioning as a hedge in this trade war with relatively favourable macroeconomics.
In a risk-off environment, equities trading at rich valuations should be avoided. However, within the equity portfolio, we would position more towards large caps with valuation comfort versus mid and small caps.
Allocation to SMIDS (small and mid-caps) would be tactically towards companies with earnings visibility.
Moreover, considering the current geopolitical landscape, I would prefer companies catering to domestic demand and being a segment leader.
Central banks have been the biggest buyers of gold in the last three years as they diversified away from the US dollar.
As per the World Gold Council, 2024 is the third consecutive year in which demand from central banks surpassed 1,000 tonnes, far exceeding the 473 tonnes annual average between 2010 and 2021.
Global uncertainty remains elevated and is expected to remain so at least until the tariff issue is resolved, so demand for the safe-haven asset (gold) is expected to remain strong.
However, after a 53 per cent nonstop rally since November 2023, we may see a pause. In the long term, depending on an investor's profile and goals, one should have a fine balance across asset classes.
The actual shape and size of Trump's tariffs are not yet clear, so their second—and third-order impact will be difficult to gauge.
Apart from tariffs, we believe that earnings growth would be key to monitoring. It would be dependent on domestic consumption patterns and pick up pace.
If you can digest the turbulence in the next one to two years, banks will provide the valuation comfort currently, but the impact of rate cuts on the NIMS (net interest margins) should be reflected in this rate-cut cycle.
Secondly, despite a conservative growth in capex allocation of ₹ 11.2 lakh crore (10 per cent over FY25RE), I believe ₹ 11.2 lakh crore is a substantial amount. Considering that the capex intensity will likely be strong in FY26, I believe players in this space should continue to benefit.
It would continue to play the local consumption story across discretionary names, especially at the higher end of the curve.
After the election-induced sluggishness dragged the economy in FY25, economic activity bottomed out in Q2 FY25 (5.6 per cent growth). I see a gradual uptick from here on.
However, it would be unrealistic to expect growth in the range of 6.2 - 6.3 per cent in FY25, unlike the government's 6.5 per cent expectation.
CPI inflation moderated to 3.3 per cent in March 2025 on the back of moderation in the food category.
IMD's above-normal monsoon expectation bodes well for the supply side. The sharp drop in the RBI's inflation projection in Q1 (-90bps to 3.6 per cent) is reflected in the shorter end of the yield curve.
Moreover, the RBI expects inflation to be within the 4 per cent target in FY25, which aligns with our house expectation.
In the base case, the US negotiates a trade deal with its trading partners, which would ideally lower the duty incidence compared to the reciprocal tariffs imposed currently.
Tariff implementation spreads the inflationary impact, at least in H1CY25 (the first half of the calendar year 2025).
Moreover, the US Fed Chair Jerome Powell expects the impact to be 'transitory' on the inflation print. I am not in the recession camp.
However, a slowdown is a given, considering elevated inflation would negatively impact the economy's consumption spending. Hence, we expect two, max three, cuts by the US Federal Reserve.
Since the RBI's guard change, domestic monetary policy has clearly shifted toward addressing growth concerns rather than price stability.
Headline inflation has moderated below the 4 per cent mark (3.3 per cent in March 2025), providing further comfort to the MPC's focus on meeting the economy's potential growth by front-loading rate cuts.
Our terminal rate expectation as a house is at 5.5 per cent to 5.75 per cent in this rate cut cycle.
Read all market-related news here
Read more stories by Nishant Kumar
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.
First Published: 28 Apr 2025, 05:38 PM IST
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Economic Times
26 minutes ago
- Economic Times
Magnet mayhem could halt Bajaj Auto's August EV output
Bajaj Auto may face a production halt for its Chetak and GoGo electric vehicles in August. This is due to a shortage of rare earth magnets. China's export restrictions on this key component are the reason. Rajiv Bajaj urges government clarity on the situation. The company also awaits updates on domestic value add norms under the PLI scheme. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Mumbai: Bajaj Auto could have a "zero month" in August for its electric scooter Chetak and electric three-wheeler GoGo because of the shortage of rare earth magnets , managing director Rajiv Bajaj said in an interview. That would make it the first automaker to halt output on account of export curbs imposed by China on the key scarcity due to China's move forced India's second-largest electric scooter maker by volume to halve EV numbers this month though it managed to report full production in June thanks to existing inventory, Bajaj is the world's dominant supplier of rare earth magnets, vital for EV manufacturing as well as others such as internal combustion engine (ICE) powered models, renewable energy, consumer electronics, defence and aerospace, and other industrial urged the government to provide all stakeholders greater clarity on the prevailing scenario and the near-term whether the auto industry's effort to seek relaxation of domestic value add (DVA) norms under the production-linked incentive (PLI) programme has yielded any result, Bajaj said there has been no conclusive information in this regard from the relevant ministry or any other regulatory qualify for auto PLI incentives, EV makers must meet rising DVA targets over time.
Mint
26 minutes ago
- Mint
Want "pin code-level granularity" in data - brands tell quick delivery firms
BENGALURU , NEW DELHI : Bengaluru/New Delhi: In India's fast-growing world of quick commerce, the real power lies not just in speedy deliveries and wholesome product portfolios, but in the data behind them. As major platforms expand private-label lines and monetize analytics, small consumer brands crib they are being shut out of critical insights on who's buying, where, and why. With limited visibility into customer behaviour, product performance, and advertisement effectiveness, these brands claim they are being priced out of planning and left behind in one of the country's most competitive new retail frontiers. From identifying best-selling products, timing of high demand, and deciding the right marketing budget, this data is crucial for brands to cut down unnecessary spending, improve operational efficiency, and keep up with cut-throat competition from brands. In the end, revenue preservation is the goal. This also signals the growing friction between sellers and marketplaces, as both try to build their own businesses with minimal expenditure and maximum output. Zepto and Blinkit have been doubling down on their private label efforts, with categories like staples, packaged food, and household items fetching higher margins. The founder of a Delhi-based kidswear brand, which sells baby accessories like feeding bottles and sippers through quick commerce channels in the top 5 cities, is worried that inadequate planning of inventory and pricing could seriously dent its revenues. 'On some of these quick commerce platforms, I can't see the distribution channels: where my ads are being shown, what kind of people are seeing them, how many are adding products to their cart, or proceeding to checkout," the founder said. A Delhi-based skincare brand founder concurs. 'Who is our customer? What's their age bracket? Within a city, which pockets are buying? That's the kind of insight we want. These platforms are sitting on pin code-level granularity." Quick commerce currently contributes about 5% to the company's revenue, but the share is growing fast. The firm expects the channel to account for 15-20% of its overall revenue in the next 18 months. 'On our D2C website, we track everything - conversion rates, drop-offs, repeat purchase percentages, and cohort behavior across months. If we could get similar insights from quick commerce, it would help us understand customer behaviour so much better," the founder added. To be sure, some platforms are making an attempt to share relevant information. In May, Zepto launched Atom, a paid analytics platform meant for providing access to relevant data points at a subscription fee. In an emailed response to Mint's queries, Zepto said it is already sharing anonymized, aggregated insights with over 100 partner brands through tools like Zepto Atom and Consumer Persona. 'Brands can now tap into real behavioural patterns like repeat purchase frequency, time-of-day affinities, category loyalties, and even cart correlations, all without compromising user privacy. These insights have helped brands optimize everything from product bundles to creative messaging and geo-targeted launches," Zepto said. Zepto Atom's pricing starts at around ₹30,000 per month, or 0.5% of the previous month's gross merchandise value (GMV), whichever is higher, and can go up to several lakhs depending on scale, said the D2C brands. Blinkit, on the other hand, charges listing fees (around ₹25,000 per product, typically credited to the brand's ad wallet) and generates revenue through commissions, ad placements, and user subscriptions like Blinkit Prime. 'Looking ahead… we're enabling brands to simulate buyer personas, run precision marketing experiments, and even validate new stock keeping units (SKUs) through city-specific sampling and surveys," Zepto added. Queries on the issue sent to Swiggy and Zomato did not elicit a response. The lookout for data and analytics comes at a time when brands are increasingly banking on quick commerce platforms for sales, with the channel accounting for the fastest growing one for many small as well as legacy brands. In the September quarter of FY25, Maggi-owner Nestle India saw 60% of its domestic e-commerce sales come from quick commerce. Nearly 7% of Mamaearth parent Honasa Consumer's business now comes from quick commerce and the firm expects its quick commerce market share to outperform that of e-commerce soon. 'We did the trial subscription (for the analytics), but don't plan to renew," said the founder of a Mumbai-based jewellery brand. 'For a growing brand, spending ₹30,000 to ₹2 lakh a month just to access data, we feel platforms should already be sharing is a big ask." 'It would make sense for us if most of our revenue came from quick commerce, or even just one specific platform," said the founder of the kidswear brand mentioned above, adding 'But right now, juggling three quick commerce platforms, along with e-commerce and logistics isn't the solution." Third parties to the rescue Brands are now seeking assistance from third-party analytics firms to help forecast demand to help plan their quick commerce actions better and reduce wastage. Startups like Inflexor Ventures-backed Clickpost, Info Edge Ventures-backed Gobblecube, and global analytics company Actowiz are at the forefront of providing revenue intelligence for brands active on quick commerce platforms, assisting them with demand forecasting and other data points like identifying best-selling products, shifting consumer preferences, fast-moving package sizes and pricing points, as well as improving ad performance. 'The information shared by marketplaces is limited and often delayed, as platforms require adequate data sets to be able to crunch it into relevant insights. We have enabled neighbourhood-level data that is so granular that brands can understand how their strategy should be shaped to suit geographical differences in demand and behaviour," said Naman Vijay, founder and chief executive of e-commerce intelligence platform Clickpost. Bengaluru-based Clickpost, which last raised $6 million from Inflexor Ventures, Athera Partners, and Riverwalk Holdings in April 2024, introduced a new feature called Prism last week, aimed at offering detailed quick commerce insights to brands at a dark store-level through API integrations with quick commerce platforms. Consumer behaviour on quick commerce often varies with regions, with different states and cities showing affinity to different brands, product sizes, and even time of purchase. 'Dark store-level data is too nuanced for brands to figure out themselves," Vijay added. Gobblecube, which raised $3.5 million from Info Edge Ventures and Kae Capital earlier this month, believes consumer brands often struggle with making sense of basic data that is crucial for decision-making. 'Quick commerce has unleashed an impressive amount of growth for small direct-to-consumer brands. However, true value lies in knowing the consumer well which is best done through real-time data," said Gobblecube's co-founder and chief executive Manas Gupta. The shift comes at a pivotal time for the quick commerce industry that is expected to triple in size by 2027, reaching ₹1.5-1.7 lakh crore, as per estimates by Kearney. The trade channel has expanded beyond being an impulse purchase mode, with 93% of sales coming at the expense of modern trade, e-commerce and kirana stores. 'Data isn't just for measuring performance. It's essential for planning, predicting demand, and connecting with customers. If brands don't know which products are selling quickly, where demand is growing, or how often items run out of stock, they're working in the dark. In today's fast-paced market, having the right data at the right time is crucial for keeping stock levels accurate, running effective marketing, and protecting sales," said Nitin Jain, managing director at consulting company Protiviti India Member that is part of Proviti's global network. The tiff between sellers and marketplaces in Indian e-commerce is not new. Several restaurants that joined food delivery platforms Swiggy and Zomato in its early days often complained about protective data sharing practices. In January, the National Restaurants Association of India (NRAI) criticized the aggregators' move to unfairly use customer demand data to model their private label offerings, thereby giving them an unfair advantage over restaurants. 'They have all our data, and they don't share it with us. They know exactly who our customers are, while we face consumer masking. They can easily divert traffic to their apps and sell similar products, like samosas or momos, under their private labels," NRAI president Sagar Daryani had told CNBC-TV18 channel earlier this year. Another personal care brand founder noted that inventory management is tough, especially with details of product movement generally under wraps. 'I don't have control over which part of Mumbai, Delhi, or Bengaluru my products are being sold in. That's a big limitation, because visibility without control limits strategy," the founder said. According to Proviti's Jain, as quick commerce grows, it is becoming more obvious that better teamwork between platforms and sellers is needed. 'Right now, many platforms keep their data closed off, which limits how efficient the whole industry can be." Naturally, the demand for revenue intelligence is picking up. Gobblecube currently helps break down data that is available to brands through platforms, however, it intends to expand its operations by enabling API integrations with platforms soon. 'The ecosystem is evolving rapidly. As the industry grows, hyperlocal behaviour can be understood better, resulting in efficient operations and better planning," said Gobblecube's Gupta. Proviti's Jain noted that setting up dedicated teams just for quick commerce is also becoming more prevalent. 'We're also seeing brands start to build hybrid data systems, pulling information from platforms, delivery partners, and third-party tools to get a clearer view of demand and deliveries. Looking ahead, there's a strong need for industry-wide rules around data sharing and transparency, similar to what happened in organized retail years ago."
Economic Times
26 minutes ago
- Economic Times
Jio BlackRock enters Indian MF market with focus on profitability and growth
Synopsis Jio BlackRock Asset Management, a new entrant in the Indian mutual fund industry, is prioritizing profitability and capturing new market growth over aggressive pricing strategies, unlike Jio's telecom approach. The joint venture aims to offer differentiated products and leverage its tech platform, Aladdin, to reduce costs and provide competitive pricing. Agencies The industry is keeping a close watch to see if Jio BlackRock will undercut rivals in the ultra-competitive mutual fund industry. Mumbai: Jio BlackRock Asset Management, one of the latest high-profile entrants into the Indian mutual fund industry, maybe following a slightly different playbook from group entity Jio's disruptive telecom foray. The 50:50 joint venture between Mukesh Ambani-backed Jio Financial Services and the world's largest asset manager BlackRock, may not be as aggressive on its pricing strategy to grab market share, unlike Jio's sharp discounting that helped it catapult into the big league in and capturing share from new growth in a market that has grown threefold in five years will be some of its mantras. "It is not at all to just capture market share, and profitability will be important and pricing is one of the key points," said Sid Swaminathan, MD and CEO, Jio Blackrock Asset Management, in an exclusive interview with ET. "We know the market is going to grow, we want to help it grow and get a share of the new growth that is coming, rather than capture from existing incumbent players. It's the growth story we are here for," said Swaminathan, who spent close to two decades with BlackRock in various fund management capacities, before relocating to India, about a year fund house is keen to offer differentiated content, value-added products and grow the market rather than grab share from existing players, he said. One of the differentiators Jio BlackRock will bring is its proprietary tech platform Aladdin, which will help in cutting transaction costs. "That allows us some cost engineering which we will pass on to end customer which results in more competitive pricing," said Swaminathan. The industry is keeping a close watch to see if Jio BlackRock will undercut rivals in the ultra-competitive mutual fund Blackrock started operations in India this month with launch of three debt schemes that include overnight, liquid and money market funds that mopped up ₹17,800 crore in early July. There have been talks that Reliance has also invested in the NFO."I don't want to be disclosing those levels of numbers now. Point is they are a large institution. They invest in all MFs right now. We have had 90 different institutions invest, so the breadth we got is very large; it is well diversified to begin with and we continue to add more investors post the NFO," he is expected to soon launch another five index funds, including four equity and one fixed-income fund. While the fund house has started with index funds, it aims to offer the entire range of index and active funds, funds that are driven by data, exchange traded funds (ETFs), specialised investment funds (SIFs) and alternate investment funds (AIFs) over time. While the Indian mutual fund market offers both regular and direct plans, the fund house has started with only direct plans, bypassing mutual fund distributors who sell regular plans and earn a commission. 'There is a growing trend towards digital; people are comfortable doing finances on the phone; we are looking to harness that with a direct digital model and that looks like the right way to start. However, nothing is off the table and as the business grows we will evaluate and take a call,' Swaminathan said. The Indian mutual fund industry, one of the fastest growing globally, has seen assets under management expand threefold in the past five years—to Rs 74.41 lakh crore in June 2025 from Rs 25.5 lakh crore in June 2020. The industry is abuzz with speculation that Jio Blackrock will scale fast and could also look at acquisitions. 'It is too premature to look at acquisitions. We are just getting started. From a strategy perspective we want to be in a situation where we will look at the evolution of the market, how we grow, what we see changing and how we adapt with our funds and distribution. We don't want to rule anything out,' said Swaminathan. 'We want to be a significant player here in the long term, but on the path to that we will get a better idea once we spend more time in the market,' he added
