How long-term investors can benefit in Nifty, Sensex crash from record high? EXPLAINED | Stock Market News

Indian stock market: Amid Trump’s tariff remarks targeting sectors like steel, automobiles, pharmaceuticals, and semiconductor chips, the stock market is witnessing significant volatility. The Indian stock market declined for the fourth consecutive session on Friday. The Nifty 50 index dropped 117 points to close at 22,795, while the BSE Sensex fell 424 points, settling at 75,311. Meanwhile, the Bank Nifty index slipped 353 points, ending at 48,981.

While explaining how long-term investors can benefit from Nifty, Sensex crash from record high, Subhash Chand Aggarwal, Chairman & Managing Director, SMC Global Securities Limited, said that stable economic growth, dedicated steps to push the export sector, and strengthening US-India trade relations will help companies generate higher earnings, which will benefit long-term investors.

Here are some excerpts from the interview –

How long-term investors can benefit from Trump’s tariff rant?

Amidst the Trump tariff rant on different sectors such as steel, automobile, pharmaceutical, and semiconductor chips, the stock market is experiencing extreme volatility. There is also a continuous fear of reciprocal tariffs but it will have a limited impact on India, as India’s GDP growth is expected to remain sustainable in the range of 6.3% to 6.8% in FY26. India is currently more focused on domestic growth with higher consumer spending and promoting infrastructure investment. The US-China trade war will help Indian exporters as the US buyers will look for alternative options to avoid higher costs. This can lead to significant export gains for sectors such as electrical machinery, automobile components, mobile phones, pharmaceuticals, and textiles led by India’s robust production capacity and competitiveness. The US is India’s largest exporting destination having a 17.7% share in India’s total exports in FY24. The recent Modi-Trump meeting has also announced the plans to boost the bilateral trade to $500 billion by 2030 which was $190.08 billion in 2023. The comprehensive trade agreement aims to reduce barriers and ease norms for the service sector, which will improve business confidence. Between April 2000 and September 2024, India received an FDI of $67.8 billion from the US and is the third largest investor in India, showcasing its trust in Indian businesses. The continued strengthening of trade relations between the two countries will directly benefit the Indian exporters, especially the IT, pharmaceutical, and electronic goods sectors. India has taken major steps in the Union Budget with the set up of an Export Promotion Mission, and BharatTradeNet for providing easy access to export credit, simplifying trade documentation, and financing solutions. The stable economic growth, dedicated steps to push the export sector, and strengthening US-India trade relations will help companies generate higher earnings, which will benefit long-term investors.

Which segment to look at for bottom fishing?

The stock market is in a correction phase and the overvaluation stress has also trimmed down, making an ideal opportunity for bottom fishing. Nifty returns fell by around 13% – 14% from all-time highs. The banking sector which has the highest weightage in the Nifty 50 is also feeling the pinch of lows. In the last 6 months, Nifty Bank returns fell by around 4% and is trading near a 52-week low. However, it is trading near the 6-month low price-to-book (P/B) ratio of 2.12, highlighting its undervaluation and buying opportunity for investors. The easing of the repo rate by 25 basis points will raise the credit demand and revive the credit growth of the banks. Additionally, bond purchases and VRR auctions by the RBI are the right steps to inject liquidity into the banking sector. The higher credit growth and RBI’s proactive steps to manage liquidity will pave the way for a strong recovery of the banking stocks.

Top 5 sector picks

After the sluggish demand, inflationary pressures, and poor margins, companies’ earnings have been dragging down in the last few quarters. In the third quarter, there is a clear sign of recovery in earnings in BFSI, IT, telecom, healthcare, and real estate sectors, making them ideal for long-term investments. Q3 results were mainly led by the BFSI sector which saw an 11% YoY increase in earnings with PSU banks reporting lower credit costs, lower slippages, and strong profit growth. The repo rate cut and tax relief will foster credit and deposit creation in the banking sector in the near to long-term. The IT sector witnessed a net profit growth of 11.7% on a year-on-year basis led by the recovery in exports to the US in the BFSI vertical of the IT companies. The margin improvements will likely be a key trigger for growth in the IT sector. The telecom sector witnessed a whopping 159.2% YoY growth in the net profit in the third quarter led by the growth in data traffic, user-base expansion, and rise in ARPU due to tariff hikes. The healthcare sector witnessed a robust growth of 25% YoY driven by the strong demand in the US generics market, increased focus on chronic therapies, and stable input costs. Real estate is also a major winner in earnings with 60% YoY growth led by the rising demand for premium and luxury offerings. All of these five sectors have delivered great results in the third quarter and are poised to grow in the long run driven by robust business models and higher consumer demand.

Any challenges for the Indian economy?

While India’s growth is stable, there are a few challenges that need to be addressed such as weakening of the rupee, slowing consumption in urban sector, and rising uncertainty at the global level. Various steps such as forex reserves sales to smoothen excessive volatility in the rupee, providing higher tax rebate to raise disposable income, and strengthening domestic manufacturing and exports will help in navigating these challenges. In the second quarter of FY25, India’s GDP growth fell to a seven quarter-low at 5.4%. There is a recovery in rural demand, a dampening in inflation, strong agricultural output, and higher capital expenditure. Also, the Index of Industrial Production (IIP) rose to 3.9% in the third quarter, higher from 2.6% in the second quarter of FY25. All these factors can increase India’s GDP growth to 6.3% in the third quarter of FY25, marginally higher than the RBI forecast of 6.2%. In the Union Budget, the fiscal deficit is targeted at 4.4% of GDP for FY26, lower than the 4.8% revised estimate for FY25. The centre’s net tax revenue is also expected to rise by 11% to ₹28.37 lakh crores in FY26. The budget also highlighted the government’s commitment to reducing the country’s debt-to-GDP ratio every year. By sticking to a disciplined and cautious fiscal strategy, India will achieve macroeconomic stability, boost reserves, and improve liquidity which will deepen the trust among foreign investors. With the improved fiscal position and higher consumer spending and investment, India’s economic growth will touch new heights.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.