August 5, 2025

Pankaj Murarka, the Chief Investment Officer at Renaissance Investment Managers, recently shared his views on the current state of India's economy and the impact of tariffs, suggesting that their overall economic effect will be moderate. Following a period of negative market sentiment, Murarka believes that prices have adjusted to some of the bad news, indicating that parts of the market are recovering, particularly after a consistent period of selling by Foreign Institutional Investors (FIIs). He predicts that this recovery can occur in the context of a larger bull market, stating that the index could potentially return about 12-13% compounded annual growth rate (CAGR) over the next few years. Despite the ongoing economic challenges, Pankaj Murarka is optimistic about the potential for recovery in consumption, mainly due to a focus on the domestic market. He acknowledges that, compared to previous years, earnings growth was notably slow last year, with the Nifty 50 index only achieving around 5%. However, he anticipates some recovery, although modest, in the current cycle of earnings. The expectation is for a low double-digit growth rate for Nifty index companies this year, with more substantial improvements expected next year, indicating a gradual recovery both for the economy and corporate earnings. Discussing the recovery sectors, Murarka highlighted that the financial sector appears to be coming off a low base and expects notable improvement in earnings growth there. He also called attention to the consumer-facing sectors which are likely to benefit from this uplift as they emerge from a prolonged period of consumer slowdown. However, he noted that concerns about tariffs loom, presenting challenges for highly export-dependent sectors, such as textiles and gems. Despite this, Murarka claims that the negative impact of these tariffs would be manageable and suggests that the overall GDP growth could still range between 6.2% and 6.3%, very close to last year's growth of 6.5%. When it comes to the future of the tariff situation between India and the U.S., he remains cautiously optimistic that a long-term deal will be put in place, potentially lowering effective tariffs over time. He sees tariffs as bargaining tools that may create temporary challenges, but ultimately believes that they pose only a moderate headwind for the economy overall. Focusing on specific industries, Murarka expresses strong enthusiasm for the internet sector, which he describes as resilient and potentially expanding at rates of 25-30%. Many companies in this sphere could achieve growth rates that significantly exceed the general GDP growth, positioning them as attractive investment opportunities amid an earnings slowdown elsewhere. In conclusion, while acknowledging the economic conditions' moderate nature and the potential slowdown of earnings growth, Pankaj Murarka from Renaissance Investment Managers encourages optimism, considering the emerging strengths in certain sectors and the overall constructive trajectory of the market in the second half of the year. He believes that with continued monetary and fiscal support, the Indian economy can stabilize and improve its growth metrics as it navigates the challenges posed by tariffs and the post-Covid landscape.

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Tags: Pankaj murarka, Renaissance investment managers, Tariffs, Economic growth, Cagr, Earnings recovery, Internet sector, Financial sector,