Expert view: Rahul Ghose of Hedged.in on key triggers for Indian stock market, top stocks to buy and more

Mint

a day ago

Expert view: Rahul Ghose, the founder and CEO of Octanom Tech and Hedged In, believes tariff clarity and healthy Q1 earnings are key to a sustained rally in the Indian stock market. In an interview with Mint, Ghose shared his views on a potential India-US trade deal and its impact on the Indian stock market and different sectors and his top stock picks. Here are edited excerpts of the interview:
The Indian equity market has been subdued recently, largely due to tariff uncertainties and global trade tensions.
The sell-off has been broad-based, with sectors like IT, auto, and metals underperforming, and major indices such as the Nifty 50 and the Sensex closing lower for several sessions.
For bulls to regain strength, the following catalysts will be crucial:
(I) Clarity on tariffs: A resolution or positive progress on tariff negotiations, especially with the US, could eliminate a major overhang and restore investor confidence.
(ii) Strong domestic flows: Continued inflows from the domestic institutional investors (DIIs) have provided some support, and a pickup in retail participation could further stabilise markets.
(iii) Robust corporate earnings: Positive surprises in the ongoing Q1 earnings season, especially from large-cap names, could trigger a reversal in sentiment.
(iv) Global stability: Easing of global uncertainties, including US monetary policy clarity and a reduction in geopolitical tensions, would also help risk appetite return.
The anticipation around an India-US trade deal has been high, with markets closely tracking negotiations ahead of recent tariff deadlines.
While some optimism has already been priced in, a concrete, favourable deal—especially one that reduces or eliminates tariffs on key Indian exports—could provide a meaningful boost to market sentiment.
However, much depends on the scope and depth of the agreement:
(I) If the deal is comprehensive and covers sensitive sectors, it could trigger a strong rally.
(ii) If it is a phased or limited deal, the impact may be more muted, as markets have partially discounted such an outcome.
A successful trade deal with the US is expected to benefit several export-oriented and globally competitive sectors in India:
(i) Pharma – Lower US tariffs would boost exports if regulatory hurdles are eased.
(ii) Textiles and apparel – Direct beneficiaries of reduced tariffs.
(iii) Auto components – Could see improved access and competitiveness in US markets.
(iv) IT services – stability and clarity on digital trade rules would help.
(v) Renewable energy – Possible boost from increased US-India collaboration.
As of July 2025, Indian equities are trading at elevated valuations, with the Nifty and Sensex having seen a sharp run-up over the past year.
The market capitalisation stood at $4.39 trillion in February 2025, down from a peak of $5.66 trillion in September 2024, reflecting some recent correction.
Current valuations remain above historical averages, driven by strong domestic flows and high expectations for structural growth. However, the sustainability of these levels will depend on:
(I)The pace of earnings growth in FY26 and beyond.
(ii)Stability in global risk factors.
(iii)The ability of the market to absorb any negative surprises in policy or earnings.
If earnings growth disappoints or global headwinds intensify, there is a risk of further correction.
Early indications suggest that the Q1FY26 earnings season will be modest, with consensus estimates pointing to 2.5–6 per cent year-on-year topline growth for India Inc., and margin improvement in select sectors like auto, consumer durables, FMCG, pharma, and power.
However, revenue growth is expected to be lower than in previous quarters, and margin pressures persist in banks and rate-sensitive sectors.
Unless there are significant positive surprises, the earnings season is unlikely to drive the market to new record highs in the near term.
Most brokerages are hoping for a more sustained rally in the second half of FY26 (H2FY26).
If I were to invest ₹ 1 lakh in the current market, I would focus on sectors with a combination of structural growth drivers, export potential, and relative valuation comfort:
(i)Pharmaceuticals: Benefiting from global demand and potential tariff relief.
(ii) Textiles and apparel: Gaining from US tariff changes and export competitiveness.
(iii) Renewable energy: Supported by policy tailwinds and global collaboration.
(iv) Select financials (banks/NBFCs): Benefiting from domestic consumption and credit growth.
(v) Consumer durables: Riding on urban demand and margin recovery.
(i) CEAT: Quality and earnings upgrades. Technically strong with no near-term resistance.
(ii) Union Bank of India: Improving financials and positive momentum. Revival in rural demand and improved earnings. Positive momentum due to the new CEO.
Read all market-related news here
Read more stories by Nishant Kumar
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.