Indian markets in wait-and-watch mode amid tariff tensions and MPC cues: Chakri Lokapriya

Economic Times

20 hours ago

ETMarkets.com
Given that the tariffs for the EU and the major countries are all settled now, so some amount of discretionary spend is likely to come back to Indian IT services companies.
"So, there the large names, the Infosys, TCS, and HCL Technologies are well positioned against the current background and the valuations are alright, so incrementally we can buy but not really overweight," says Chakri Lokapriya, CIO-Equities, LGT Wealth.
Still remains to be seen as to what happens to pharma in Trump's tariff regime, but does it seem like generics, the ones selling domestically still are going to be a little aloof and what happens to which way you think the stocks are going to head in general?
Chakri Lokapriya: You are right in terms of the focus right now of the Trump administration is on the big cap pharma, the branded drugs, and so that is why the price controls, etc, are likely to happen. As far as generic drugs because they are to begin with lower margin products, that kind of tariffs hurts the US consumer. So, given this backdrop, there is not much going to be happening in terms of tariffs on pharma but given the overall sentiment which is actually negative for India as relates to US tariffs, Indian pharma is also unlikely to kind of tread water.
Let us throw the spotlight on it, the kind of earnings that we have seen coming in from IT, not a lot of conviction is being built on this sector right now. What is your take on it overall because other than maybe one or two names, you have not seen a lot of lustre from this sector this time around?
Chakri Lokapriya: Yes, given that the tariffs for the EU and the major countries are all settled now, so some amount of discretionary spend is likely to come back to Indian IT services companies. But I would still tread with a little bit of caution. So, there the large names, the Infosys, TCS, and HCL Technologies are well positioned against the current background and the valuations are alright, so incrementally we can buy but not really overweight.
What is your sense on Delhivery? One has often talked about what is going to work in India is consumption, with that tech flavour, Delhivery in that sense is in a unique space. If you are going to shop more, models like this will definitely persist and increase further. But the fact that their newsletter and how they are positioning themselves now as a more tech company as opposed to just a delivery company, have you read and gone through their model at all?
Chakri Lokapriya: Logistics as a business worldwide has become very technology intensive using lots of the latest things like AI in inventory management, in warehousing space, dedication and delivery timelines, etc and those are still very early days in India.
But companies like Delhivery included are spending that technology on their logistics business which will kind of take time in India to improve but it is a step definitely in the right direction and that is where India is also going to go and so against that space, so they have a leg up versus other logistics companies and Delhivery will do well from current levels.
The big trigger is going to be the MPC outcome and while they have already cut rates by a sizable 50 basis points, it has not been all fully passed through. Do you sense the RBI this time around will hold fire and the markets somewhere do have priced that in?
Chakri Lokapriya: Probably in this quarter they might hold back, but the trend clearly is that they will cut rates, now but again with inflation actually going down and actually now it gives the RBI the opportunity to kind of offset some of the things that (3012) slowdown that you will see in some of the export sectors like textiles and therefore, while the consensus is hold, the rates in general will come down if not this time, next time.