The long -term consequences of these technological disruptions will be in -depth. In the short term, a man – US President Donald Trump – disrupts geopolitric and global trade in an unprecedented way.
Investors must wade carefully through this VUCA world. Investment decisions must adapt to the developing prospects that change quickly.
Trump rate impact
The unfair, unreasonable, unjustified rates of 50 percent imposed on India will influence India to the US. Since the export of labor -intensive goods such as textile, gems and jewelry and learning products will be influenced; There will also be a loss of jobs.
The GDP growth of India, however, is probably not considerably affected, because India is a domestic consumption-driven economy with export to the American account for only 2 percent of GDP. Since exports such as pharmaceutical products and electronics are exempt over rate, the net export to the US will only be about 1.4 percent of India GDP.
That is why the impact on India’s growth will only be marginal. India will continue to grow by around 6 percent and retain its status as the fastest growing large economy in the world.
Reforms in Fast Forward mode
The focus of India is now to convert the current crisis into opportunities by speeding up reforms to set up growth. The proposed GST rationalization, if implemented without delay, can significantly stimulate the question, starting with the festival season.
The proposed abolition of the 28 percent and 12 percent GST rates and the relocation of many goods and services to lower rate plates, apart from the rationalization of the GST regime will help to stimulate consumption demand considerably. Together with the tax cuts in the budget and the monetary relaxation that is implemented by the MPC, the proposed GST rationalization is indeed an important reform initiative.
Expect moderate returns in the short term
The growth is likely to stare with Q2 FY26. The likely result for FY26 is a GDP growth of 6.2 percent and the growth of operating results from 8 to 10 percent.
That is why the return expectations must be moderate. The Bullrun of the last five years yielded an excellent return to investors. During the five -year period ranging from 5 January 2020 to 31 July 2025, the BSE delivered 500 16.9 percent return.
The Mid and Smallcaps performed better than with 23 to 25 percent return. These high returns that are supplied by the MID and Smallcaps have attracted persistent money flows to these segments and push their ratings to an unsuspecting terrain.
Beware of valuations
In the short term, the market can become irrational and remain irrational for some time. But in the long term, ratings will return to the average. This is a lesson from history.
That is why investors must give the necessary weight to valuations in their investment decisions. Nifty on 24500 acts on a PE of about 21 – one of the highest ratings in the world.
From the BSE 500 shares, 215 are traded on PE of more than 50. High ratings ask FIIs to sell in India and move money to cheaper markets. So far, FIIs have sold equity in 2025 for $ 13 billion. It can be said that given India’s long-term clear growth prospects, Largecap valuations, although higher than historical averages, are justified.
The MidCap segment has a strong tail wind of growth, so that the valuations are partially justified. But small caps are overly appreciated. That is why investors must be careful in investing in the overvalued segment.
Prioritize safety in these volatile times
It is important to prioritize safety in these volatile and complex times. Quietly valued high -quality shares are always safe.
Growth shares such as digital platform companies will continue to attract investors, despite their high ratings. Smallcaps, powered by liquidity, are overly appreciated. Investors must consider these facts while investing.
(The author is the main investment strategist, Geojit Investments Limited)
((Indemnification: Recommendations, suggestions, views and opinions of experts are their own. These do not represent the views of economic times)
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