How long-term traders can profit in Nifty, Sensex crash from document excessive? EXPLAINED

Indian inventory market: Amid Trump’s tariff remarks focusing on sectors like metal, vehicles, prescription drugs, and semiconductor chips, the inventory market is witnessing important volatility. The Indian inventory market declined for the fourth consecutive session on Friday. The Nifty 50 index dropped 117 factors to shut at 22,795, whereas the BSE Sensex fell 424 factors, settling at 75,311. In the meantime, the Financial institution Nifty index slipped 353 factors, ending at 48,981.

Whereas explaining how long-term traders can profit from Nifty, Sensex crash from document excessive, Subhash Chand Aggarwal, Chairman & Managing Director, SMC International Securities Restricted, stated that secure financial development, devoted steps to push the export sector, and strengthening US-India commerce relations will assist firms generate greater earnings, which can profit long-term traders.

Listed here are some excerpts from the interview –

How long-term traders can profit from Trump’s tariff rant?

Amidst the Trump tariff rant on completely different sectors corresponding to metal, car, pharmaceutical, and semiconductor chips, the inventory market is experiencing excessive volatility. There may be additionally a steady concern of reciprocal tariffs however it should have a restricted impression on India, as India’s GDP development is anticipated to stay sustainable within the vary of 6.3% to six.8% in FY26. India is at present extra centered on home development with greater shopper spending and selling infrastructure funding. The US-China commerce conflict will assist Indian exporters because the US patrons will search for different choices to keep away from greater prices. This will result in important export positive aspects for sectors corresponding to electrical equipment, car elements, cellphones, prescription drugs, and textiles led by India’s sturdy manufacturing capability and competitiveness. The US is India’s largest exporting vacation spot having a 17.7% share in India’s whole exports in FY24. The current Modi-Trump assembly has additionally introduced the plans to spice up the bilateral commerce to $500 billion by 2030 which was $190.08 billion in 2023. The great commerce settlement goals to cut back limitations and ease norms for the service sector, which can enhance enterprise confidence. Between April 2000 and September 2024, India obtained an FDI of $67.8 billion from the US and is the third largest investor in India, showcasing its belief in Indian companies. The continued strengthening of commerce relations between the 2 international locations will straight profit the Indian exporters, particularly the IT, pharmaceutical, and digital items sectors. India has taken main steps within the Union Price range with the arrange of an Export Promotion Mission, and BharatTradeNet for offering quick access to export credit score, simplifying commerce documentation, and financing options. The secure financial development, devoted steps to push the export sector, and strengthening US-India commerce relations will assist firms generate greater earnings, which can profit long-term traders.

Which phase to take a look at for backside fishing?

The inventory market is in a correction section and the overvaluation stress has additionally trimmed down, making an excellent alternative for backside fishing. Nifty returns fell by round 13% – 14% from all-time highs. The banking sector which has the best weightage within the Nifty 50 can also be feeling the pinch of lows. Within the final 6 months, Nifty Financial institution returns fell by round 4% and is buying and selling close to a 52-week low. Nevertheless, it’s buying and selling close to the 6-month low price-to-book (P/B) ratio of two.12, highlighting its undervaluation and shopping for alternative for traders. The easing of the repo charge by 25 foundation factors will elevate the credit score demand and revive the credit score development of the banks. Moreover, bond purchases and VRR auctions by the RBI are the correct steps to inject liquidity into the banking sector. The upper credit score development and RBI’s proactive steps to handle liquidity will pave the way in which for a robust restoration of the banking shares.

Prime 5 sector picks

After the sluggish demand, inflationary pressures, and poor margins, firms’ earnings have been dragging down in the previous couple of quarters. Within the third quarter, there’s a clear signal of restoration in earnings in BFSI, IT, telecom, healthcare, and actual property sectors, making them supreme for long-term investments. Q3 outcomes have been primarily led by the BFSI sector which noticed an 11% YoY improve in earnings with PSU banks reporting decrease credit score prices, decrease slippages, and robust revenue development. The repo charge lower and tax reduction will foster credit score and deposit creation within the banking sector within the close to to long-term. The IT sector witnessed a internet revenue development of 11.7% on a year-on-year foundation led by the restoration in exports to the US within the BFSI vertical of the IT firms. The margin enhancements will doubtless be a key set off for development within the IT sector. The telecom sector witnessed a whopping 159.2% YoY development within the internet revenue within the third quarter led by the expansion in information visitors, user-base growth, and rise in ARPU as a result of tariff hikes. The healthcare sector witnessed a sturdy development of 25% YoY pushed by the robust demand within the US generics market, elevated concentrate on continual therapies, and secure enter prices. Actual property can also be a significant winner in earnings with 60% YoY development led by the rising demand for premium and luxurious choices. All of those 5 sectors have delivered nice leads to the third quarter and are poised to develop in the long term pushed by sturdy enterprise fashions and better shopper demand.

Any challenges for the Indian financial system?

Whereas India’s development is secure, there are a couple of challenges that have to be addressed corresponding to weakening of the rupee, slowing consumption in city sector, and rising uncertainty on the world degree. Numerous steps corresponding to foreign exchange reserves gross sales to smoothen extreme volatility within the rupee, offering greater tax rebate to lift disposable revenue, and strengthening home manufacturing and exports will assist in navigating these challenges. Within the second quarter of FY25, India’s GDP development fell to a seven quarter-low at 5.4%. There’s a restoration in rural demand, a dampening in inflation, robust agricultural output, and better capital expenditure. Additionally, the Index of Industrial Manufacturing (IIP) rose to three.9% within the third quarter, greater from 2.6% within the second quarter of FY25. All these components can improve India’s GDP development to six.3% within the third quarter of FY25, marginally greater than the RBI forecast of 6.2%. Within the Union Price range, the fiscal deficit is focused at 4.4% of GDP for FY26, decrease than the 4.8% revised estimate for FY25. The centre’s internet tax income can also be anticipated to rise by 11% to ₹28.37 lakh crores in FY26. The price range additionally highlighted the federal government’s dedication to decreasing the nation’s debt-to-GDP ratio yearly. By sticking to a disciplined and cautious fiscal technique, India will obtain macroeconomic stability, increase reserves, and enhance liquidity which can deepen the belief amongst international traders. With the improved fiscal place and better shopper spending and funding, India’s financial development will contact new heights.

Disclaimer: The views and suggestions supplied on this evaluation are these of particular person analysts or broking firms, not Mint. We strongly advise traders to seek the advice of with licensed consultants, contemplate particular person danger tolerance, and conduct thorough analysis earlier than making funding selections, as market situations can change quickly, and particular person circumstances might differ.