GST rate cuts, RBI's policy and liquidity actions to support markets

Overall, we feel that stock selection would be the alpha generator over sector selection...Subhasis Ghosh CEO at Kotak Mahindra Pension Fund

- Ram Sahgal

Rising geopolitical tensions and other global risk-off events can induce large corrections in the stock markets, but the rising cult of domestic equity investing, evident through pension, insurance and mutual funds, is absorbing foreign portfolio investor outflows and resulting in quick and sharp recoveries from the lows, according to Subhasis Ghosh, chief executive officer at Kotak Mahindra Pension Fund.

Ghosh expects earnings growth improvement from the second half of the current fiscal as the impact of policy rate cuts and GST rationalization works its way through the economy.

Edited excerpts:

GST has been rationalized to leave more in the hands of the common man. Do you think this will move the needle or will earnings overhang and selling by foreign portfolio investors (FPIs) amid tariff tensions preclude a tear-away rally? The GST move should be seen as a more structural realignment of rates. Apart from the near-term sentiment boost, we expect it to boost overall growth, with a pick-up in the formalization of the economy. FPI selling has been persisting for some time; however, domestic flows have more than offset it. Overall, we remain constructive on the GST cut, combined with central bank actions (rate cuts and easing of cash reserve requirement) taken in recent times.

The Nifty corporate earnings growth, though better than expected, still came in single digits. Do you think earnings growth has bottomed out?