US stimulus bill may shake global markets, but India stays resilient: Punita Kumar Sinha
Punita Kumar Sinha
,
Pacific Paradigm Advisors
.
Let us start with your
market
view. How do you think global markets and Indian markets are positioned?
Punita Kumar Sinha:
Well, what is in focus right now is the big beautiful bill that just being passed by the house in the US and that is going to have an impact on both US markets, US economy.
It will have implications for currencies, US bonds, and indirectly that will impact some of the other global markets. So that is quite the most recent kind of development that could have long ranging impact because the fiscal deficit in the US is going to rise in the short term that would obviously have an impact on both the dollar and the US bond yields potentially and it will also have some impact on spending patterns over time, the healthcare sector, so that is kind of the focus plus the data that has come out of the US right now is not showing that there needs to be further rate cuts, at least the economy seems fairly better than expected in terms of employment, so that is another area that people are going to, investors are going to focus on is will there be more rate cuts or is President
Trump
going to try and push out power and get a new governor for the central bank in the US for the
Fed
and therefore, there could be some change in stance.
So, those are the important events that at least US markets and some global markets will focus on. India seems relatively insulated from these developments and we seem to be dancing to a different tune. So, still we are focused very much on what is happening within India where things seem to be generally fairly good. The monsoons have been good and credit off take is picking up a little bit, inflation is mild, and the market is beginning to recognise some of these facts.
Live Events
So, what should one do in this kind of market? When you flagged off, there are multiple concerns around us.
Punita Kumar Sinha:
I mean, there are some concerns obviously. Valuations are a concern. While FIIs have started putting money back into India, the money that is flowing into other markets is actually far higher than what is coming to India.
And if you look at the performance of the markets globally, year to date while it seems like India is doing well now and things have turned around in the last couple of months; if you look at year to date European markets have done a lot better; a lot of other EM markets have done a lot better than India. So, India has really not been an outperformer this year even though last few months seem to have seen some strength, but relatively to other markets we are not the best performer and that goes back to the one single concern that has always weighed on India which is valuations.
So, at what level this global strength to your mind will get challenged? Could it start with reversal of dollar? Could it start with GDP data? Because while we may argue about the state of the economy, the fact that US markets at an all-time high, the harbingers like
Nvidia
, they have made a new high, that is clear indication of where the appetite right now is moving.
Punita Kumar Sinha:
See, the thing is that US and India have been the best performing markets globally over the last decade. And given the demographics and the growth cycle that we are in in India, I do not think that is going to get derailed by much of the global concerns or any global events to a very large extent.
So, longer term, medium-term, India obviously is well positioned to capitalise on all the trends that are in favour of our economy here. So, short-term yes, there could be some concerns that emanate time to time and that causes some corrections, but longer term the investors will have to keep focusing on India. Now, we have to obviously worry about the fact that the geopolitical situation is still quite uncertain and what that means for commodities, what that means for currencies, and right now the markets seem to be ignoring every risk out there.
And so, one should start also be thinking of the risk-reward trade off. And given where valuations are, given that there are risks out there that the markets have ignored in the last one month or two months, that there could be some rationalisation and some repositioning of portfolios as a result of that.
But coming to the India growth story, select pockets that you were betting on was NBFCs and India's consumption story as well. But given the runup in
NBFC
specifically, are the valuations still reasonable?
Punita Kumar Sinha:
Well, if you look at the last several years, the NBFC sector, the financial sector has been quite a bit of laggard and so to that extent given good monsoons, the credit cycle is going to keep on improving from here, at least that is what the current data is showing and therefore, there could be more upside in the financial sector. Obviously, there is a large universe of stocks to choose from.
So, you will have to be, obviously the investors will have to become more focused on individual companies and their own growth trajectory versus just a sector trend. The last couple of months has been the whole sector has done really well for the most part except the private sector banks. But even some of the private sector banks have done well, but some others have not. But going forward this sector still does offer value and one will probably have to be more selective.
Soon, we are going to have the earning season as well. Tell me in this Q1, where is it that you are anticipating the positive surprises or the big disappointments?
Punita Kumar Sinha:
The earnings is another area of a bit of a concern in the shorter term because if you look at the earnings estimate, there have been quite a few downgrades. Also, if you look at earnings growth absolute numbers, the numbers that Indian investors are used to Indian companies delivering between 15% to 20% growth over the last decade, so that is actually considerably lower than in the past.
And given where valuations are, given the fact that we are trading at multiples again that are slightly above the 10-year averages, one would have to be more selective and growth is definitely for FY26, the numbers, as I said, are not as they have been in the past, so investors will have to start looking out to FY27, FY28, that is sort of what the data show.
What is your view on it?
Punita Kumar Sinha:
Well, it is actually a complicated story. To what extent is AI going to disrupt, what our IT services sector is doing is still open to debate and the verdict is out I mean, in the sense that there is definitely going to be some change in the nature of the work that the Indian companies are doing and whichever companies are able to keep up with the new trends would obviously be winners.
So, it is going to be a mixed bag. Indian companies will really need to innovate. The interesting thing is in India itself, we do not hear much about the use of AI by companies as much as in the US. In the US, we are definitely seeing a lot of change happening. Companies are really changing, the kinds of jobs people are doing, and our IT companies are very focused on the US and so to that extent they are changing, innovating, and there could be periods of consolidation. But in the end, we will come out strong in my view.
Given the geopolitical situation that we have at play, what is the best strategy that you would advise for our viewers to have because I remember back in May when you connected with us and it was whole that India-Pak issue that was going on, you suggested that one should really be on the defensive side, one should have a defensive portfolio, have some cash in the hands as well. But what about now that given that the trade deal could be on, the earning season is approaching, what is the best asset diversification that you would like to suggest?
Punita Kumar Sinha:
Well, I still maintain my view that the markets have run ahead of all the risks out there and it has actually been quite surprising that the markets have ignored all the geopolitical tensions that the world is seeing, whether it was India-Pakistan, Israel-Iran.
There is obviously Russia- Ukraine and there is a lot of tariff disputes and the markets seem to have ignored all of this.
So, I still think that one should remain cautious and also focused on the risks and in terms of asset, it is great to be diversified. And while right now it seems that small and midcaps have been the place to have been in over the last 12 months, over the last two years-three years, it has been really like a midcap, a smallcap rally in India and while in the rest of the world, in the US it has been technology.
So, there has to be some diversification from these themes and one should still focus on the company's inherent growth rates and companies that are insulated largely from exports or global trends and focus more on India specific growth.
ETMarkets WhatsApp channel
)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Economic Times
10 minutes ago
- Economic Times
India, US trade deal may backfire on EU exports if India opens door to GM feed: GTRI
GTRI cautions that allowing US GM farm products under a trade pact could harm India's agri exports to the EU due to strict GM labeling and consumer resistance. Cross-contamination risks from India's weak agri-logistics could lead to shipment rejections and damage India's GMO-free image. Currently, India only allows Bt cotton cultivation and imports of GM soybean and canola oil. Tired of too many ads? Remove Ads Also Read: India and Trump are haggling over the same constituency Tired of too many ads? Remove Ads India risks losing its export competitiveness in the European market if it allows genetically modified (GM) animal feed imports from the United States under the upcoming trade deal, according to the Global Trade Research Initiative ( GTRI ). The economic think tank issued a cautionary statement on Saturday, highlighting the impact such a move could have on India's agricultural shipments to key markets like the European Union (EU), known for its strict stance on genetically modified and the US are currently negotiating an interim trade pact, which is expected to be announced before July 9. Among the proposals being considered is the import of GM-derived products such as soybean meal and distillers dried grains with solubles (DDGS), a by-product made during ethanol production, usually from corn or other grains, for use in animal founder Ajay Srivastava said the consequences of such imports could be severe for India's agri-export sector, especially when it comes to European buyers who maintain strong resistance to GM-linked products. While GM feed is technically permitted in the EU, many European consumers prefer fully GM-free supply chains, and the region enforces stringent GM labelling warned that India's fragmented agricultural logistics network and absence of proper segregation systems increase the risk of cross-contamination. This could lead to trace GM presence in export consignments, potentially triggering shipment rejections and additional testing expenses. More importantly, it could damage India's image as a GMO-free supplier in sensitive segments such as rice, tea, honey, spices, and organic foods."This could lead to shipment rejections, higher testing costs, and erosion of India's GMO-free image, especially in sensitive sectors like rice, tea, honey, spices, and organic foods. Without robust traceability and labeling systems, GM feed imports could hurt India's export competitiveness in the EU," Srivastava described genetically modified crops as plants that have been engineered by introducing specific genes—often from bacteria, viruses, other plants, or in some cases, animals—into their DNA to give them traits such as pest resistance or tolerance to herbicides. For example, the BT gene from the bacterium Bacillus Thuringiensis allows the plant to produce a protein toxic to specific insects. Genes from soil bacteria have also been used to help plants survive clarified that although GM crops are biologically plant-based and considered vegetarian, the presence of animal-origin genes in some crops might pose issues for communities or individuals with strict religious or ethical interpretations of added that studies suggest GM DNA breaks down during digestion and does not enter the animal's meat, milk, or other produce. "Therefore, foods like milk or chicken are not classified as GM, even if the animals were fed GM feed. However, critics argue that this blurs the line for consumers who wish to avoid GM-associated products entirely," he whether farmers can reuse seeds from genetically modified crops, Srivastava said GM seeds are usually not reusable for both legal and biological reasons. They are often patented and sold with contracts that forbid saving and replanting. Additionally, many GM crops are hybrids, and seeds collected from them generally perform poorly when reused. He pointed out that in India, Bt cotton is the only GM crop officially approved for cultivation. Though some farmers have attempted to reuse Bt cotton seeds, the results have typically been said contamination risks persist globally, as GM and non-GM crops can mix at various stages including transport, storage, and to GTRI, India maintains a cautious stance on GM crops. Currently, only Bt cotton is approved for cultivation, and no GM food crop has received commercial approval, though field trials are ongoing. The country allows imports of genetically modified soybean oil and canola oil, but does not permit imports of GM grains, pulses, oilseeds, fruits, or other food and feed feed materials like soybean meal and DDGS remain banned, Srivastava said.(with PTI inputs)
United News of India
20 minutes ago
- United News of India
MoS Pabitra Margherita to visit Malaysia for ASEAN-related meetings, also visit Cambodia
New Delhi, July 5 (UNI) Minister of State for External Affairs Pabitra Margherita will be visiting Malaysia where he will attend the Foreign Ministers' Meetings under the ASEAN framework, and will also visit Cambodia. During his official visit to Cambodia from July 7-8, MoS Margherita will be calling on the senior leadership of Cambodia, and would interact with ITEC/ ICCR Alumni, as also members of the Indian community. He would also review the extensive restoration and conservation work carried out by India at World Heritage Sites in Cambodia, that are also symbols of our shared culture, a statement said. Our excellent, close relations with Cambodia are underpinned by shared civilizational heritage and a robust, people-centric development partnership. The visit would further bolster our bilateral ties and provides an opportunity for both sides to exchange views on advancing initiatives and issues of mutual interest in diverse sectors. MoS Margherita will visit Kuala Lumpur, Malaysia, from July 10-11, at the invitation of the current ASEAN Chair, Malaysia. MoS will participate in the Foreign Ministers' Meetings under the ASEAN framework in the format of ASEAN-India, East Asia Summit (EAS) and ASEAN Regional Forum (ARF). India and ASEAN share cultural and civilisational bonds. ASEAN is the cornerstone of India's Act East Policy and the Indo-Pacific vision. The visit will renew India's deep engagement with the ASEAN-centred regional architecture, underline our strong commitment to ASEAN unity, ASEAN centrality and the ASEAN Outlook on the Indo-Pacific (AOIP) and strengthen the ASEAN-India Comprehensive Strategic Partnership. MoS (PM) is also expected to hold bilateral meetings with his counterparts from other countries in Kuala Lumpur, Malaysia, on the margins of the ASEAN-related meetings, the statement added. UNI RN
Time of India
21 minutes ago
- Time of India
Explained: How Jane Street made a staggering Rs 735 crore profit in Indian markets in just a day? SEBI reveals details of ‘manipulation' strategy
SEBI investigation into Jane Street profits highlights worrying aspects about India's derivatives market structure. (AI image) Jane Street Group, the US trading powerhouse that was slapped with a trading ban in Indian markets on Friday, made a whopping Rs 735 crore single-day profit during a January 2024 trading session, according to a SEBI order published that day. The substantial earnings were part of Jane Street's total profits of Rs 36,502.12 crore across various market segments in India from January 2023 to March 2025. SEBI's detailed investigation specifically highlights January 17, 2024, when the organisation allegedly implemented a sophisticated "Intra-day Index Manipulation" scheme involving the Bank Nifty index and its components, resulting in significant gains from index options, according to an ET report. What did Jane Street do to make Rs 735 crore single-day profit? On January 17, 2024, the Bank Nifty index commenced trading considerably lower at 46,573.95, down from its previous closing value of 48,125.10. "Media reports claimed that this fall may be attributed to the market's apparent disappointment with the results announced by HDFC Bank after market close on January 16, 2024," SEBI noted. The regulatory body identified a dual-phase approach that enabled Jane Street to accumulate a net profit of Rs 734.93 crore within several hours of trading. During the initial trading period—"Patch I"—the organisation allegedly purchased Bank Nifty constituent stocks and futures valued at Rs 4,370 crore, which SEBI noted was considerable relative to typical market trading volumes. These acquisitions resulted in price increases, causing market participants to incorrectly interpret it as a market recovery. "At a time when participants in index options markets are misled by the above support for Nifty Bank, JS Group builds effectively Rs 32,114.96 crores of bearish positions in the much more liquid Nifty Bank index options by buying cheap Put options and selling expensive Call options," the order said. During the subsequent phase—"Patch II"—Jane Street disposed of almost all its long-term holdings. "The sales are aggressive, in a manner that pushes down prices in the component stocks and hence the index. JS Group books losses in intraday cash/ futures market trading," the SEBI order alleged. The profits generated from index options significantly outweighed the equity losses. When the Bank Nifty index declined from its morning peak, put options increased substantially in value whilst call options decreased. "Profits in index options more than compensate for the JS Group's losses in intraday cash/futures trading," SEBI said. Jane Street 'Manipulation' Pattern Jane Street employed identical "Intra-day Index Manipulation" tactics during 15 out of 18 days under SEBI's scrutiny. For the remaining three instances, they implemented an "Extended Marking the Close" approach, which continued for three additional days in May 2025, even after receiving SEBI's warning notice. Also Read | Jane Street ban: Why has SEBI barred US-based trading firm, which made multi-thousand crore profit, from India's securities markets? Explained Following a National Stock Exchange advisory in February 2025, the "JS Group persisted with similar trading activities, disregarding both the Exchange's cautionary communication and their own pledges," as stated by the regulatory authority. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Secure Your Child's Future with Strong English Fluency Planet Spark Learn More Undo While the NSE concluded its investigation, SEBI took stringent measures. The regulator issued orders on Friday prohibiting Jane Street and four related entities from participating in Indian securities trading, whilst directing banks to restrict their account withdrawals. Additionally, SEBI initiated proceedings to seize Rs 4,840 crore in purported unlawful profits. The investigation highlights worrying aspects about India's derivatives market structure, where global entities utilising sophisticated algorithms and high-speed trading techniques compete against individual retail options investors. SEBI's investigation revealed Jane Street's dominant position, noting they "consistently running what appeared to be by far the largest risks in 'cash equivalent' terms in F&O particularly on index option expiry days. " The regulatory body emphasised the substantial magnitude of Jane Street's market activities in cash and futures segments. They observed that the firm understood that Nifty Bank would likely decline by day's end, considering their planned strategy to aggressively liquidate their morning acquisitions and beyond. SEBI pointed out that other market participants remained uninformed about these developments, leading them to engage in transactions whilst the Nifty Bank index was being artificially sustained at elevated levels temporarily. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
