Will Trump 2.0 aid India Inc earnings? Subhash Chand of SMC Global answers

Subhash Chand Aggarwal, chairman & MD, SMC Global Securities says Trump's return may provide several benefits to India due to trade tensions between US and China

US President-elect Donald Trump's comeback may provide support to Indian companies' laggard earnings and muted stock market performance, says SUBHASH CHAND AGGARWAL, chairman & managing director, SMC Global Securities Limited. In an email interview with Sirali Gupta, Aggarwal said even though Trump's return to the White House could add to market volatility, it may provide several benefits to India. He also discussed expectations from the Union Budget, Q3 earnings, and rupee depreciation's impact on markets. Edited excerpts:

 

What are your expectations from the markets in 2025?

In 2025, there can be modest growth in markets with better earnings, higher consumption expenditure, supportive government policies, and domestic flows. However, FII’s bearish stance will remain a challenge on account of the overvalued Indian market, better returns from the other markets, and dollar appreciation.

 

 

What themes may rule the markets?

Financial sectors witnessed a 15 per cent annual increase in credit growth and better asset quality in 2024. It will continue to grow with rising digitisation, financial inclusion, and the latest reforms. The technology sector rebounded well in the second half of 2024 with higher demand for artificial intelligence (AI) and cybersecurity solutions.

 

The US' higher spending on tech will also drive India's information technology (IT) sector in 2025. The infrastructure and manufacturing sector will experience higher growth through rising government capex, and robust public-private partnerships. Other new-age sectors that will see higher investor interest in 2025 are quick commerce, electric vehicle (EV), and health tech with initial public offerings (IPOs) being lined up.

 

What are your expectations from Q3 earnings? What trends should investors watch out for in this quarter?

The Nifty Q3 earnings might witness revenue growth of 5.7 per cent and profit growth of 13.2 per cent. The automobile sector witnessed volume growth of 12 per cent year-on-year (Y-o-Y) with car sales rising for three straight months in December 2024. Other sectors that could see slight improvements in their earnings are IT, Banking, Financial Services, Insurance (BFSI), and FMCG.

 

How do you see the Budget panning out for the markets?

Budget 2025 will play a key role in markets as it has to compensate for poor economic growth, lower consumption, and subdued demand. With the higher infrastructure allocation, strong fiscal consolidation approach, and lower personal income tax slabs, the budget could revive both individual spending and country-level growth.

 

The BFSI sector, specifically, is looking for lower tax rates on long-term capital gains and aligning with fixed deposits to boost investment. To increase insurance penetration, there is a need to reduce goods and services tax (GST) rates on insurance premiums and higher tax exemption benefits. Increasing allocation for digitalisation schemes, a dedicated funding window for microfinance institutions, and the introduction of new schemes to boost financial inclusion, especially among women, might be there in this Budget radar to boost the BFSI sector.

 

How will US President-elect Donald Trump's return affect Indian stock markets?

Donald Trump's return to the White House could add volatility to the Indian stock market with higher US bond yields and a stronger dollar. However, it may provide several benefits to India with rising exports due to trade tensions between the US and China, lower energy costs, manufacturing, and defence support, reduced corporate taxation, and a business-friendly approach.

 

Barring the short-term uncertainties, Trump's return may support sectors such as information technology (IT), defence, pharma, and manufacturing. IT outsourcing and the defence-strengthening approach of Trump could directly fuel India's sectoral growth. The rise in semiconductors and mobile phone exports will position India as an attractive hub for supply chain diversification. Overall, it can provide support to Indian companies' laggard earnings and the muted stock market performance.

 

Is the depreciation of the Indian Rupee a concern for the stock market?

Current rupee depreciation to all-time lows is a concern but it certainly benefits the export-focused sectors such as pharmaceuticals, textiles, and IT, while downgrading the import-focused sectors such as energy, electronics, and chemicals.

 

However, RBI monetary policy decisions, corporate earnings, and Foreign Institutional Investors (FII) outflows will be key monitorables.