No sector mispriced, market remains efficient despite global uncertainty

The Indian consumption story received a fresh boost with the government’s sweeping GST rate cuts, particularly benefiting automakers, insurers, and FMCG companies. Experts believe this move will revive momentum across the consumption basket, even as global trade uncertainties continue to weigh on investor sentiment.

When asked about the outlook for autos, Mark Matthews in an interview to ET Now said, “Yes, that would be fitting in as you say naturally to the consumption story given the big cut to taxes for autos, so would insurance by the way. There are a whole bunch of things that benefit fast-moving consumer goods. So yes, absolutely it fits into the story.”

The conversation, however, quickly broadened beyond autos. Post the GST announcements, market watchers are eyeing potential gains for select dairy and electronics companies. Matthews acknowledged this trend, saying, “Yes, you are right, anything consumer-related will come out of this probably stronger than before the tariffs unexpectedly became a big issue for India. And on the tariffs, I might add that we do not really know what Donald Trump wants. It could be something related to Ukraine and the Indian purchases of oil, could be some breakdown in the personal relationship between the prime minister and Donald Trump or it could be access to the Indian consumer that the Americans want.”

He added that the unpredictability of the U.S. President’s stance might actually work in India’s favor. “The good news is that if you look at all the other countries which have been through this and there is a long list, he can change his mind very easily. So, I am pretty sure that bridges can be mended. India just has to be creative in how it approaches this. So, all we need to do is give Donald Trump a win.”

That view was reinforced by recent exchanges between the two leaders, where both sides emphasized friendship and cooperation. With this backdrop, attention is shifting toward beaten-down export-driven sectors like IT and pharmaceuticals.

On IT, Matthews struck a cautiously optimistic tone. “I have been thinking for some time that the IT stocks are too cheap… when stocks are down more than 20%, you should start taking an interest in them and the IT space is down 20% from the beginning of the year.” He acknowledged the sector’s cyclical relationship with banks but suggested an inflection point could be near.

As for what to avoid, Matthews did not single out any particular sector. “I do not have any strong dislikes at this point. I cannot say there is anything that strikes me as being grievously mispriced. It has been an efficient market.”

On India’s long-standing strength in IT services, Matthews agreed that global clients are unlikely to easily find alternatives.

“I hate to say that I agree with you because ultimately nobody is irreplaceable. There must be some country in the world that could do this, but it would take many years, not just a few months, to make that transition in education and infrastructure. The American companies have invested a lot of money and a lot of time building up their relations with Indian IT companies. They cannot just flip over to Vietnam or the Philippines or some place like that.”

With GST cuts bolstering consumption-driven sectors and IT valuations looking attractive after a steep correction, Matthews’ view suggests a balanced but hopeful outlook for Indian equities, provided global uncertainties ease in the months ahead.