“In my opinion, agreeing on tariffs with the US is a basic requirement. I don’t think it is an additional boost to the market,” Vora told ET Now. “If we don’t solve the tariff issue, it will be negative for the market, but settling it is the most normal thing in the world.”
He added that the market has already priced in the expectation of a deal. “I don’t see a situation where the trade situation with the US is not resolved. It will be resolved, I don’t know the timing, but the fact is that the US has reached a settlement with almost all countries, including China. India is one of the last countries that has not resolved the whole issue, so the sooner it happens, the better.”
Domestic recovery and portfolio strategy
Vora believes that investors should base their portfolios on a domestic cyclical recovery rather than on external trading factors. “We have to assume that sooner or later everything will be back to normal. The second half will be better. Consumption is doing well, the government is encouraging investments and the RBI is maintaining easy liquidity and favorable interest rates.”
He noted that both private and public investments are expected to increase, which will support the broader economic recovery.
Time correction Creating opportunity
After a year of subdued market returns, valuations now look more attractive, Vora said. “A good time adjustment of 12 to 15 months is good. With time adjustment also comes valuation adjustment, because we’ve had earnings growth of about 10% over the last year. So we’ve had time adjustment and valuation adjustment, and broader markets are showing good earnings resilience.” While the Nifty 50 has grown at a modest pace, Vora believes the real opportunity lies in mid- and small-cap stocks. “India’s story is not necessarily reflected in the top 50 stocks. If we move to the midcaps and smallcaps, that’s where exciting stock picking happens. Even if markets deliver normal returns, stock picking can create alpha.”
Important sectors to keep an eye on
According to Vora, the near-term focus remains on domestic consumption and investment-led growth. “While the trade deal is necessary to ensure that exports to the US are not disrupted, it has not been the main driver of growth for India,” he said.
“In the near future, domestic consumption and private sector investment-led recovery will drive growth. The durable equities, capital goods and defense sectors look promising,” he noted, adding that the banking sector offers strong value after a prolonged period of underperformance.
“If GDP grows at 6.5-7%, credit growth should be around 13-14%. So banks – both private and public – offer very good value if growth returns.”
He also highlighted emerging opportunities in new-age technology and platform-based businesses, calling these “bottom-up” activities that remain exciting.
China Plus One strategy intact
Vora was clear on concerns about the potential impact of a US-India trade deal on the China Plus One strategy: “Absolutely not. The de-risking of the global economy away from China will continue and India will remain a key player.”
He added: “India, in terms of protection, royalties, transparency and rule of law, is much more open compared to China. The China Plus One theme is not going away; in fact, it will become stronger once the trade deal is concluded.”
Defense stocks: a long-term play
On the defense sector, which has witnessed sharp rallies and recent cooldowns, Vora maintained a long-term view. “Many of these stocks have corrected in price and time over the past nine months. This is a long-term theme; quarterly numbers don’t matter much. Build a core portfolio of defense names you like and stick with it.”
Mihir Vora believes that the expected resolution of the India-US tariff issue is essential but not a major upside trigger. He remains optimistic about India’s domestic recovery, sees opportunities in midcaps, banking, capital goods and defence, and reaffirms his confidence in the China Plus One theme as India continues to strengthen its global manufacturing and investment appeal.
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