here’s a breakdown of the key points from the provided text:
Positive Outlook: The speaker is generally optimistic about the market, believing it’s unlikely to “fall off a cliff.”
Earnings Support: Earnings are expected to be around 22-23% for the broader market and 10-15% for small caps, providing a supportive base.
Liquidity and Cost of Capital: A “frontloaded dose of liquidity and cost of capital” will keep valuations “slightly elevated.”
Price Inflation: The speaker anticipates “price inflation” due to RBI actions, which will support the market.
Overshooting Expected: Due to earnings support and RBI actions, the market is more likely to “overshoot” rather than undershoot or stay in equilibrium.
Sector-Specific Views:
Pharma:
The speaker has liked the pharma sector for some time.
Overhang of 200% Tariff: The speaker dismisses the idea of a 200% tariff on pharma, stating it’s “not doable.” They beleive there’s a holiday on such tariffs for the next 1-1.5 years.
Impact of Tariffs: If a 200% tariff were to be passed on, it would be “extremely adverse” for the US healthcare sector, as generics are crucial to the US pharma industry.India-US Tariffs:
Market Reaction to Tariffs:
The market has digested tariffs up to around 10%.
Any number between 10% and 15% would be positive for the markets.
A number around 26% would be taken very adversely.
Anything more than 15%, in the vicinity of 20% or 26%, would be “negatively looked at by the market.”
Other Tariffs: The speaker also mentions the importance of whether 500% tariffs on oil imported from Russia will materialize.
Impact of Tariffs on US Macros:
Harmful to US Economy: The speaker believes tariffs are doing “more harm than good” to the US economy.
Inflationary: Tariffs will ultimately be paid by American consumers and will be “quiet inflationary.”
US Dollar Pressure: The speaker suggests that tariffs are contributing to pressure on the US dollar, indicating it’s “headed on the downsi” (likely meaning downside).