Limited tariff impact on India, reform push likely: Sunil Subramaniam

Time of India

08-08-2025

Markets dislike uncertainty, and now that the tariff news is out in the open, that overhang is easing. The DII buying reflects this reduced uncertainty.
Domestic Institutional Investors are expected to continue supporting the market. Positive results from companies like Titan are encouraging for the Indian economy. The earnings season has been decent, with some sectors performing well. Government fiscal measures and RBI actions are beginning to take effect. A pickup in production is expected with the festive season approaching.
Tired of too many ads?
Remove Ads
Tired of too many ads?
Remove Ads
"So, DII buying is likely to continue supporting the market today. Additionally, some of the results announced post-market hours have been positive—like strong consumption numbers from Titan , for example—which bodes well for the domestic economy ," says Sunil Subramaniam Well, first of all, I'm not a technical person. But if you look at how the market reacted to the Trump announcement, it clearly indicates two things. From an international investor's perspective, it seems the market is oversold. They've been selling through the month on the back of negative tariff news, and that selling continued yesterday.However, DIIs stepped in strongly to buy. There's still a lot of cash with DIIs—mutual fund cash balances are around 5%. I think this was seen as an opportunity by DIIs to support the market.When you analyse the tariff announcements, less than 5% of India's exports are likely to be affected by the 50% tariff route as things stand. That gave DIIs some comfort. Also, this may prompt the Indian government to accelerate productivity reforms and introduce export-related incentives to support labour-intensive sectors and counter the impact of tariffs.So, DII buying is likely to continue supporting the market today. Additionally, some of the results announced post-market hours have been positive—like strong consumption numbers from Titan, for example—which bodes well for the domestic economy.Some sectors have reported very good earnings. In fact, pharma has done well, and some auto companies have also reported strong numbers. Banks have been okay overall.As you rightly said, there was some initial pessimism around earnings due to the first few results, but that concern has now been largely disproved. Overall, the earnings season has been fairly decent. We're likely to see high single-digit growth for the Nifty and double-digit growth for the broader market.On a quarter-on-quarter basis, there's also been some improvement. What's also evident from company guidance is that this quarter marks a transitional phase. Government fiscal measures and RBI actions are now beginning to take effect. Of the 100 basis point rate cut, 77 basis points have already been transmitted. So, we'll start seeing the impact of that.Next quarter's expectations are also positive, especially with the festive season arriving earlier this year—Diwali is on October 23rd. That means we're going to see a pickup in production to stock up the dealers in the next two months. Add to that the CRR cut effective from September 5th, the transmission of rate cuts, and the tax giveaways from the budget—all these factors are expected to boost the festive season. Corporates are optimistic about this.If this plays out as expected, the market seems to be factoring that in, which explains why markets have responded reasonably well to earnings so far. DIIs have been the primary drivers this month, and they're focusing more on sectors and specific stocks.Given the tariff situation, external-facing sectors have been under pressure. IT has underperformed, pharma to some extent, and realty as well. But now, we're seeing a return of interest in IT—buying started yesterday.Markets dislike uncertainty, and now that the tariff news is out in the open, that overhang is easing. The DII buying reflects this reduced uncertainty.To me, this earnings season represents a critical transition—from the slowdown we saw in the last quarter of the previous fiscal year to a more stable footing this year. RBI maintaining its 6.5% growth projection is also a positive signal that the domestic economy is on a strong path.