It and pharma stocks to outperform amid ‘MUmed’ Indian Stock Market Outlook, Says Geojit ‘Vinod Nair

The Indian Equity Markets Have Delivered An Impressive Rally Since April 7th, with the Browder Market Posting A Return of 13.3% Over the Past One and A Half Months. The uptrend was initially driven by the us pausing retaliatory tarifs and further supported by a ceasefire agreement Mid-PRIL after a hiatus of 6–7 months. However, the net inflows are modest, reflected the need for a more stable global environment to Attract Further Investments. The passage of the reciprocal tariff Reduced Global Trade War Risks, which encounter Fii Sentiment. Yet, The Primary Beneficiaries of this Development appear to be other asian economies like China, Japan and Taiwan Drawing More Active Fii Participation Away from India.

Looking Ahead, Fiis are expected to Closely Monitor Developments in the Us Fiscal Landscape. A key event is the senate’s upcoming discussion on the mega-budget approved by the house of represcents. This Budget Includes Tax Cuts and New Spend Plans Projected to Increase Us Government Debt by $ 3 trillion over the decade, pushing the debt-to-gdp ratio to an estimated 124% curren In 2024. Tax cuts are estimated to widen the annual fiscal. The bond market has reacted with concern, as evidentized by the US 10-yar treasury yield spiking about 4.5% AMID Heavy Bond Selling. This comes on the heels of moody’s downgrade of the US credit rating from its top tier, raising alarms over the refinance of nearly $ 14 trillion of federal debt, estematked to mature soon, at higher interesting Rate. These fiscal concerns may trigger a pullback in us markets, potential enhancing the attractiveness of emerging markets, including Japanese bonds and asian rights. A Possible Moderation in the Us Budget Bill by the Senate will be key to alleviating market unceerty.

Meanwhile, India’s Recent Rally, Driven by Better-Tha-Expected March Quarter Results, Now requires new catalysts to sustain the Momentum. The Q4Fy25 Earnings Season Delivered A 10% Yoy EPS Growth, A Good Surprise But Short to Justify The Current 20.5x One-Year Forward P/E Valuation. More Robust Fundamentals are Needed to Support Further Gains.

In the Near Term, IT and Pharma Stocks are expected to underperform amid a MUTED OUTLOOK DRIVEN by the US Credit Downgrade, Regulatory Overhang from “Most-Favored-Nation” Policy for prescription Drugs and Weak Q4 Results from Sector Leaders. The Lack of Fresh Positive Triggers and Ongoing Uncertainty Around Us Fiscal Stability Have Prompted Investors to Book Profits and Adopt a Cautious Stance. This has been to broad-based selling, especially as Clarity on the India-Rus Trade Agreements Remains Eluse. Retail Investors, Having Been The Strong Net Buyers from October to Fabrury, are now in Profit-Booking Mode.

Looking to the medium term, there is optimism that Q1 fy26 will show improvement, supported by the low base of fy25 (sub-5% EPS growth), direct tax cuts, interest rate reductions, etc. Favorable Monsoon, and Increased Government Speaking. With a Softer Inflation Outlook and the INR/UsD Exchange Rate Appreciating Below 85.5, The RBI is expected to maintain a growth-oriented policy stance. However, a clearer picture of Q1 fy26 results performance, like can we grow back to the +15% growth rate, will only Emerge by the end of June.

The Author, Vinod Nair is Head of Research at Geojit Financial Services,

Disclaimer: The views and recommendations made Above are that of individual analysts or broking companies, and not of mint. We Advise Investors to Check With Certified Experts Before Making Investments Decisions.