Expert view: Kush Gupta, Director at SKG Investment & Advisory, believes the Indian stock market may remain sideways in the short term, with Nifty trading range-bound between 24,500-26,000 in the coming few months. In an interview with Mint, Gupta shared his views on the potential impact of tariffs, earnings revival and the IT sector’s outlook. Here are edited excerpts of the interview
Given Trump’s tariffs and weak earnings, can the Nifty 50 hit a record high and top the 27k mark this year?
Trump’s tariffs came as a big surprise to India Inc. We have always enjoyed a healthy relationship with the US through various bilateral engagements, IT services exports, and a huge NRI community, so it is certainly disappointing that they specifically target Indian companies with the highest possible tariffs.
We started the year with a lot of positivity, domestic equity inflows were strong, but geopolitical developments such as this one have definitely hampered the outlook and shifted moods.
The collateral damage in terms of FIIs pulling out of Indian equities also can’t be ignored.
This weak global sentiment, along with weak earnings, has led to a lacklustre performance from Nifty, with only nearly 6 per cent YTD returns.
Going forward, to hit a record mark of 27,000 this year, Nifty has to go up by 5 per cent within 5 months. While it may not look like a very uphill battle, I would be cautious in predicting that.
I think there will be a sideways movement, with Nifty range-bound between 24,500 and 26,000 in the coming few months. A better earnings season in October has the potential to reverse the sentiment, though.
How is the Trump tariff going to impact the Indian economy and markets?
India has become a target in Trump’s tariff wars, but it has also been a tool for the US administration to achieve political goals, such as exerting pressure on Russia.
Whatever the reasons may be, the Indian economy will surely take a punch in the gut when the tariffs kick in.
With a 50 per cent rate hike, almost all of India’s $86.5 billion [£64.7 billion] in annual goods exports to the US stand to become commercially unviable once it kicks in.
The US is India’s top export market, accounting for 18 per cent of exports and 2.2 per cent of GDP.
A 25 per cent tariff could cut GDP by 0.2–0.4 per cent, risking growth slipping below 6 per cent this year.
India’s electronics and pharma exports remain exempt from additional tariffs for now, but the impact will be felt domestically, with labour-intensive exports like textiles, gems, and jewellery taking the fall.
Apart from the economic setback, this is a major sentimental dent on Indian exporters and the government, which is trying very hard to push the vision of Atmanirbhar Bharat and grow its manufacturing sector.
When can we expect a material revival in earnings?
June 2025 quarter earnings for Nifty 50 companies have so far delivered a largely in-line performance.
Growth was powered by a few key sectors: BFSI (4 per cent YoY), technology (7 per cent), oil and gas (7 per cent), cement (47 per cent), and utilities (13 per cent).
While broader participation would have been better, one has to understand that not all cylinders fire at the same time in an economy.
Global institutions such as Jefferies stated that the results were better than expected, and the downgrade ratio is improving sequentially.
Motilal Oswal Financial Services (MOFS) also reported that earnings for 38 Nifty firms grew 7.5 per cent year over year, ahead of their estimate of 5.7 per cent.
In light of the above, I think revival in earnings is showing positive signs, we can continue the momentum going into the festive months, and Q3 and Q4 are expected to outperform (as they usually do) the first two quarters.
How do you assess the Q1 earnings? What were the key upgrades and downgrades?
While Q1 earnings were not great and did not give a reason to stand up and cheer for India Inc., they have not disappointed us either.
In fact, given the global circumstances, a slowdown in earnings for the last three to four quarters and a slight revival shown in FY26 are reasons to cheer.
However, going forward, there have been mixed forecasts. MSCI India’s FY26 EPS has been trimmed by 1.7 per cent, and Nifty EPS for FY26 has been cut by 1.1 per cent to ₹1,110. FY27 EPS estimates have also been trimmed by 0.8 per cent to ₹1,297 (from ₹1,308).
We are underweight on IT, Metals and textiles.
I think tariff wars will continue to create havoc in the manufacturing sector while IT is battling a massive transformation led by AI.
Key upgrades include healthcare, infra, financial services, and telecom.
While there has been a steady flight of foreign funds at a market-wide level, these sectors witnessed a strong rebound in foreign portfolio investment flows in May and June 2025.
Domestic consumer spending remains a reliable pillar. The Reserve Bank of India has implemented a 100-basis-point rate cut over three consecutive policy meetings, aiming to drive credit growth and boost both investment and consumer spending.
Owing to policy making and a young demographic, we are overweight on Consumer Durables as well.
Is India’s growth narrative still appealing to investors? What reforms could reinvigorate the economy?
India’s growth narrative is going strong, and our macroeconomic fundamentals have shown remarkable resilience.
The economy grew 7.4 per cent year over year in the final quarter of fiscal year 2024 to 20252—with 6.5 per cent growth for the whole year—setting the stage for a more confident outlook for fiscal year 2025 to 2026.
India’s economic outlook is buoyed by three factors: a growing consumer base, a broadening investment landscape, and a digitally skilled workforce. Urban spending is rising, and private capital expenditures are showing positive signs.
According to a Deloitte report, India went from being the 11th largest economy in the world in 2009 to fifth in 2024, so there is definitely momentum to go far.
On the reforms side, I feel there is still a lot of work to be done in improving ‘ease of business’, land acquisition laws to promote manufacturing, and relaxation of FIIs / FDI norms to facilitate more investments.
While there has been significant growth in infrastructure, India is a very big country, connectivity is still not at its best, and there is a lot of headroom in Infrastructure growth that can change our economic landscape.
What are your views on the IT sector? How should investors approach IT stocks? Do you have any preferred picks from the sector?
India’s IT sector is a $280 billion industry that serves as the backbone of our services-led economy.
While IT is not directly hit by the tariffs raised by the Trump administration, we expect that collateral damage in terms of client sentiment, discretionary spending, and the flow of large deals cannot be ignored.
Tighter or delayed client spending can cause downstream ripple effects and affect the performance of companies.
IT is already undergoing transformation due to the AI revolution, companies are forced to change their business models and adapt to the new norm, so the timing also doesn’t help.
While spending on technology, data systems, and automation has increased, other factors may slow overall growth.
We are maintaining a wait-and-watch view on IT companies, refraining from taking any calls until there is more clarity on the tariff front.
With an erratic geopolitical situation and a dynamic environment with AI and GPUs replacing the old established order, it is difficult to predict a short-term trend.
What sectors are you positive about for the next one to two years?
While most economies are battling tariff wars and the US is trying to establish a new world order, I believe that the Indian growth story is intact.
We are going strong in sectors like financial services, telecommunications, cement and consumer durables.
Earnings growth in Q1 FY26 showed revival in these pockets with double-digit growth.
Consumption spending is on a sustained rise, and in the near term, easing inflation and proactive monetary policy are expected to further fuel consumption spending.
By 2030, the country is expected to add around 75 million middle-income households and 25 million rich and affluent households.
This demographic shift will position India as one of the fastest-growing consumer markets globally.
With an increase in 5G adoption and Jio announcing its plans for 6G expansion, telecom should continue its robust growth as the country gets connectivity in the remotest corners.
The government’s initiatives to push infrastructure and the recent real estate boom are turning out to be a much-needed lifeline for the cement sector.
The industry faced many challenges in 2024, but this year, it has seen revival, and we expect 8-10 per cent growth going forward.
How can retail investors navigate the current market volatility? What should be their investment strategy?
I think, firstly, retail investors should not panic. Market volatility is part of the stock market.
It may seem like there is a lot of tension with tariff wars, geopolitical unrest, and earnings slowdown, but there are always factors affecting the market.
Today, the Nifty is at the same level as it was one year ago, and in spite of that, its five-year absolute return is 118 per cent.
That shows significant growth and should give investors confidence to stay put, ride out the storm, and wait for the next upcycle.
A good investment strategy should be to identify sectors that are likely to do well through these turbulent times.
India’s consumption is growing, infrastructure and telecom services are expanding, and financial services are being penetrated deeper.
Investors can focus on these sectors to generate returns on their portfolios before the dust settles and we see broader market growth, like we saw post-COVID.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
