What should investors do as subdued Q1 results, tariff tensions extend stock market losses? Explains Geojit's Vinod Nair
Despite the broader indices slipping into negative territory, selective buying emerged in consumption-oriented sectors such as FMCG and discretionary stocks. This was supported by signs of urban & rural demand revival, easing inflation, declining interest rates, and a favourable monsoon—all of which contributed to margin improvement and a positive undertone on volume growth.
Key underperformers were in the IT sector, weighed down by weak results from key bellwethers and expectations of deferred orders and investments. This raised concerns over FY26 earnings estimates and added to valuation pressures. Investors are now closely watching corporate guidance on margins and sector dynamics as the earnings season unfolds.
However, after the initial setback, the prices of IT stocks are stabilising with a reduction in volatility due to deep value trading near 5years -1SD (standard deviation) forward P/E valuation and hope of a rebound in business in CY26 as the Nasdaq100 index has breached to an all-time high.
Banking stocks have a muted trend, which is expected to continue in the short term, facing headwinds from NIM contraction and sluggish growth in advances, which could impact its profit performance in the short-term. Also, the valuation appears somewhat stretched at current levels, suggesting that the upside may be limited in the near future. However, with regulatory support such as liquidity infusions and other revival measures, the banking sector is expected to recover over the medium to long term. We continue to maintain a positive outlook on the industry, and back stocks with a moderate credit-to-deposit ratio and improvement in asset quality, which provide a cushion against short-term volatility.
Markets attempted a partial rebound this week, driven by optimism over a potential interim trade deal with the U.S. and multi-year low domestic inflation, which boosted hopes of RBI rate cuts and economic acceleration. However, the continuation of subdued quarterly results, the clamp in the global market, and the premium valuations of India led to further losses in the market. Investors are adopting a selective approach, focusing on earnings visibility and sector resilience. Mid & Small cap were able to perform marginally better.
The key intake of the month is that India's macroeconomic outlook remains strong, supported by easing inflation, lower interest rates, a healthy monsoon, and softer oil prices. A drop in inflation in eight straight months has provided an optimism to the market. However, investors are showing a mix of optimism and caution to assess the Q1FY26 corporate earnings, as an upgrade in earnings is the most essential fact in the premium-valued stock market.
The author, Vinod Nair, is Head of Research at Geojit Financial Services.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making investment decisions.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
27 minutes ago
- Time of India
India–UK CETA set to boost auto industry through tariff-free access, mobility gains
The signing of the India–UK Comprehensive Economic and Trade Agreement (CETA) on Thursday is expected to significantly benefit the Indian automobile and auto components industry, with tariff-free access and streamlined professional mobility opening new avenues for global integration, according to industry experts. Signed by Commerce and Industry Minister Piyush Goyal and UK Secretary of State for Business and Trade Jonathan Reynolds, the agreement ensures duty-free access for 99 per cent of Indian exports to the United Kingdom — including key segments such as automotive, engineering goods, and electric mobility components . The move is set to enhance India's competitiveness in the British market, particularly for high-value auto components, EV sub-assemblies , and precision-engineered parts, which align with the UK's sustainability goals. 'The landmark trade agreement between India and the UK marks a transformative moment in the global economic landscape. At Mahindra, we believe in the power of such cross-border partnerships to unlock economic potential, create high-quality jobs, and accelerate progress in future-facing sectors like green mobility and advanced manufacturing,' said Dr Anish Shah, Group CEO & MD, Mahindra Group. Greater Market Access, Smoother Mobility Beyond goods, the pact offers a boost to Indian automotive professionals, including engineers, designers, and R&D experts. The agreement includes liberalised visa processes and simplified entry categories, and crucially, exempts Indian professionals and their employers from UK social security contributions for up to three years under the Double Contribution Convention. This is expected to improve cost competitiveness for Indian firms and facilitate stronger B2B partnerships, particularly for those engaged in technical services, design support, and innovation functions. 'CETA unlocks tariff-free access for key Indian sectors, including auto components and engineering goods. It enables smoother movement of skilled professionals, which is crucial for industries like automotive that depend on global design and technology networks,' said Piyush Goyal. Auto Sector at the Heart of Trade Ambitions With India–UK bilateral trade currently at $56 billion, both countries have set a target to double trade by 2030, with the automobile sector seen as a key contributor. The UK remains a top destination for Indian EV firms, engineering consultancies, and IT-led automotive services. 'CETA is expected to benefit the Indian auto component sector through enhanced export opportunities and streamlined regulatory processes, particularly in electric mobility, precision engineering, and lightweight materials. MSMEs, which form the backbone of our industry, stand to gain significantly,' said Shradha Suri Marwah, President, ACMA. The agreement also includes provisions to reduce non-tariff barriers, support sustainable manufacturing, and encourage innovation-led collaboration — areas increasingly relevant to India's transition to clean mobility. For OEMs, MSMEs, and EV startups, the deal offers the opportunity to scale operations, enter new export markets, and forge joint ventures, accelerating the adoption of green and intelligent transport solutions. 'The India–UK FTA signals a significant step forward for the climate-tech sector, offering a more predictable policy environment and encouraging long-term investment. It paves the way for deeper partnerships in electric mobility, green hydrogen, and climate-resilient infrastructure,' said Vasudha Madhavan, CEO & Founder, Ostara Advisors. As global automotive supply chains become increasingly interconnected, India's access to one of Europe's most mature markets under this robust FTA is expected to bring both strategic depth and commercial value to the sector's global ambitions.
The Hindu
27 minutes ago
- The Hindu
Seven years on, govt puts out new telecom policy draft
The government will soon publish a new National Telecom Policy, seven years after the last one was put out. The Department of Telecommunications (DoT) on Thursday published the draft text for comment, with a vision statement emphasizing a 'telecom product nation that is driven by innovation and that universally connects its citizens meaningfully, securely and sustainably.' The terminology is back to 'telecom' from 2018's National Digital Communications Policy, with a sector-specific focus on increasing connectivity, modernising the domestic telecom supply chain, and adding 10 lakh jobs in the industry (a fourth of the NDCP's 4 million target in the broader digital communications sector), while 'upskilling' a similar number of existing workers. The policy also emphasises on reducing the sector's carbon footprint (by 30%) and improving the cybersecurity of telecom firms. On 'universal and meaningful' connectivity, the government has set a target of covering 90% of the population with 5G by 2030, and 100% with 4G. Towers that are connected by fiber to telecom networks (as opposed to wireless links to other towers with physical links, which reduces speeds and reliability), are sought to be increased from 46% to 80%. 1 million Wi-Fi hotspots are targeted to be set up (a tenth of the 2018 policy's target), and encouraging satellite internet where needed. The document also proposes a boost to local research and development (R&D) efforts in telecom, and increased Indian participation in global standardisation discussions, particularly of 6G, including by possibly recognising such activities as a Corporate Social Responsibility activity. Domestic manufacturing should increase 150% by 2030, the document says, with 'a Telecom Manufacturing Zone (TMZ) with integrated infrastructure for enabling telecom and network equipment design and manufacturing ecosystem'. The draft encourages the use and development of AI specifically for cyberspace, such as in cybersecurity, where AI is touted as both a challenge in offensive terms (such as through generative AI-fueled bots attacking telecom networks), and in defensive strategies, like systems that use AI to detect large attacks and thwart them at an early stage. It also suggests using AI in complaint resolution 'through unified portal and use of … chatbots'. The focus on security is carried on from the 2018 policy, with specific strategies to 'monitor Indian and foreign satellites and improve mitigation of satellite carrier interference,' and 'increasing monitoring … along the border areas to reduce cross-border spillage'. Some of the objectives are activities where work has already begun, such as the mobile number validation service, to allow institutions to verify an individual mobile user's identity; the service's draft regulations were released for comment earlier this month. The 'lawful interception' language from the 2018 policy no longer finds a place in Thursday's draft, which focuses instead on building quantum-secure communications. On sustainability, the new policy also adds the 'circular economy' imperative of recycling materials from telecom equipment in use.
Hindustan Times
27 minutes ago
- Hindustan Times
India, Britain seal trade deal to bring down tariffs, barriers; keep dairy out
NEW DELHI: India and Britain on Thursday signed a trade deal that is expected to boost two-way commerce by $35 billion in the long run, cut tariffs on goods ranging from textiles to whisky and enhance market access, as Prime Minister Narendra Modi and his UK counterpart Keir Starmer unveiled the Vision 2035 strategy to drive collaboration in defence, technology, climate and migration. Britain's Prime Minister Keir Starmer and Prime Minister Narendra Modi shake hands after Britain's secretary of state for business and trade, Jonathan Reynolds and India's commerce minister Piyush Goyal, signed a free trade agreement at Chequers near Aylesbury, England on July 24 (via REUTERS) The two sides also unveiled plans to negotiate a Double Contribution Convention (DCC) to give a fillip to the services sector, especially finance and technology, by exempting employers of Indian workers from paying social security contributions in the UK for three years, and a Defence Industrial Roadmap for closer cooperation on military hardware. The DCC will come into force alongside the trade deal. India and Britain finalised the Comprehensive Economic and Trade Agreement in May after more than three years of negotiations, and the pact was signed by commerce minister Piyush Goyal and his UK counterpart Jonathan Reynolds during Modi's visit to Britain. The two sides gave a push to the negotiations amid economic turmoil unleashed by US President Donald Trump's tariff policies to overcome long-standing differences on issues such as levies on British alcohol and automobiles, and access to India's markets. Modi described the deal as 'not just an economic partnership, but a plan for shared prosperity' that will benefit India's youth, farmers, fishermen and MSME sector. Starmer said the agreement is the 'biggest and most economically significant trade deal' concluded by the UK since leaving the European Union (EU) in 2020 and also 'one of the most comprehensive deals' by India. Speaking at a media interaction with Starmer, Modi said: 'On the one hand, Indian textiles, footwear, gems and jewellery, seafood and engineering goods will get better market access in the UK. New opportunities will be created in the UK market for India's agricultural produce and processed food industry.' He added, 'On the other hand, products made in the UK, such as medical devices and aerospace parts, will be available to the people and industry of India at accessible and affordable rates.' The DCC, Modi said, will give new energy to the services sectors of both sides by boosting the ease of doing business. 'Along with this, the UK economy will get Indian skilled talent,' he said. He added that the deal between two democratic countries and major economies will strengthen global stability and prosperity. Starmer said that, apart from benefiting whisky distillers in Scotland and the services sector in London, Manchester, and Leeds, the deal will lower prices on Indian goods, including clothes, shoes, and food. 'It will add about £4.8 billion to the UK economy every year and £2.2 billion to wages and hundreds of millions of pounds to regions and nations up and down the UK,' he added. The India-UK Vision 2035, aimed at renewing the bilateral comprehensive strategic partnership, will serve as a roadmap for a reliable partnership in technology, defence, climate, education, and people-to-people connect, Modi said. The two sides will also work to strengthen their Technology Security Initiative, launched a year ago to drive cooperation in telecom, critical minerals, IA, semiconductors, quantum computing and biotech. The trade deal provides near-complete tariff elimination for 99% of Indian exports, unlocking opportunities for labour-intensive sectors, processed food items and other high-tariff segments where India has a competitive edge. For instance, duties on 99.7% of tariff lines for processed food items will fall from as high as 70% to zero, and for animal products, from the range of 20% to zero for 99.3% of tariff lines. Other sectors where duties will be cut to zero are marine products (20%), transport and automobiles (18%) leather and footwear (16%), electrical machinery (14%), and aluminium (10%). The elimination of tariffs on textiles and clothing, from the current level of 12%, will enhance India's competitiveness against players such as Bangladesh and Vietnam and boost exports of value-added garments. Exporters of seafood, dairy and meat products are expected to benefit from the cut in levies on animal and marine products. In addition to cutting tariffs, the deal will streamline trade protocols and ensure protection for India's agricultural sector, which is the cornerstone of rural livelihoods and economic security, officials said. The benefits for Indian farmers in UK markets will match or exceed those enjoyed by exporters from Germany, the Netherlands and other EU members, and agricultural exports are forecast to rise by 20% in the next three years, they said. The FTA excludes India's most sensitive agricultural segments, with no tariff concessions on dairy products, apples, oats and edible oils. These exclusions, the officials said, reflect India's calibrated trade strategy that prioritises food security, domestic price stability and protection of vulnerable farmers. The deal's sanitary and phytosanitary (SPS) measures will help Indian exporters meet British standards and reduce rejections, the officials said. In the services sector, Indian service providers are expected to benefit from opportunities in the UK, especially in management consultancy, computer-related services and education services. The deal also eases mobility for Indian professionals, including contractual service suppliers working on projects in the UK, yoga instructors and chefs. The inclusion of a first-of-its-kind trade and gender chapter in the trade deal aims to empower Indian women and ensure gender inclusion, with targeted support for women-led enterprises and workers. India-UK trade in goods and services was worth $57.8 billion (£42.6 billion) in January-December 2024, representing an 8.3% increase from 2023. India's imports from the UK totalled £17.1 billion, while its exports to the UK were worth £25.5 billion. Total bilateral trade in goods was worth £17.8 billion in 2024, while total bilateral trade in services amounted to £24.8 billion. India was Britain's 11th largest trading partner in this period, accounting for 2.4% of the UK's total trade. India's key exports to Britain include textiles, apparel and clothing accessories, pharmaceutical products, telecom and sound equipment, refined oil, electrical and electronic equipment, machinery appliances, iron and steel, and gems and jewellery. India's main imports from the UK are non-ferrous metals, metal ores and scrap, industrial machinery, transport equipment, beverages and tobacco, electrical machinery and appliances, professional and scientific instruments, and chemicals. Sunil Bharti Mittal, chairman of Bharti Enterprises and co-chair of the India-UK CEO Forum, who is heading a delegation of 16 Indian business leaders accompanying the Prime Minister, said Indian industry welcomed the trade deal with 'great optimism'. The business delegation was organised by the Confederation of Indian Industry (CII). 'This agreement establishes a modern, forward-looking partnership that will stimulate innovation, ease market access and foster investment. Businesses in India as well as the UK stand to gain tremendously, as it lays the groundwork for scaling up bilateral cooperation across key growth sectors,' Mittal said. The Federation of Indian Chambers of Commerce and Industry (FICCI) also welcomed the trade deal, with its president, Harsha Vardhan Agarwal, stating that it marked a key milestone in India's evolving trade architecture. 'It complements the objectives of Atmanirbhar Bharat by empowering domestic industries to scale globally, engage competitively, and leverage value chains more effectively,' he said. Tufan Erginbilgic, the CEO of Rolls-Royce Plc, hailed the free trade agreement as a landmark in bilateral cooperation. 'We welcome the new UK-India roadmap for closer collaboration on defence, technology and innovation. Rolls-Royce is growing its aerospace capabilities in India, and we look forward to working with Indian partners to co-develop power and propulsion technologies for India and the world,' he said.
