The trade deal has reignited optimism across India’s equity markets, reversing weeks of anxiety marked by FII outflows, a weakening rupee and sliding mid‑caps. As sentiment turns from caution to conviction, Sunil Singhania, Founder, Abakkus Asset Manager told Mahesh Nayak while negatives are largely behind us and animal spirit returning, all eyes will be on earnings, and if earnings deliver, markets will follow. Excerpts:
How do you read the sudden shift in sentiment after the trade deal announcement?
The past few weeks were unusually stressful—markets were sliding, FIIs were selling aggressively, the rupee had touched 92, and there was no visibility of a trade deal. Even the Budget, though not disappointing, failed to deliver the positive surprise investors were hoping for. Sentiment had turned fragile, mid‑ and small‑caps were correcting sharply, and conversations had shifted almost entirely to gold and silver.
In that backdrop, the trade deal has acted like a spark. It has reignited interest in equities, shifting the mood from sell on rise to buy on dips. That psychological turnaround is significant.
The big question now is whether FIIs will return in a meaningful way. What’s your assessment?
I’ll give you a real example. We run an offshore fund and were in discussions with a large European investor. They were waiting specifically for the trade deal. Now that it’s done, I have a long call scheduled with them tomorrow (Wednesday). That tells you something.
Also, India has underperformed emerging markets by 30–35% over the last 15 months. FII underweight on India is at a multi‑year high. If India starts moving, they are under risk of missing out. So the trade for them is to rotate out of markets like Korea and China—which are heavily AI‑skewed—and move into a more balanced growth story like India.
On equity markets
Given this setup, would you personally be a buyer in the equity markets today?
We have always been buyers. Our job is to invest, and we stay constructive. The last year may not reflect that because flows were weak, but our stance has consistently been positive.
What about retail participation? Has that momentum sustained?
Absolutely. Our recent mutual fund NFO was the largest in 2025, despite being from a new AMC. That itself shows retail appetite. Retail investors may get cautious at times, but they don’t disappear. They are becoming more disciplined and long‑term in their approach.
Will the rally be stock‑specific, or do you expect broader participation?
When FIIs return, they typically start with large caps. Fortunately, large caps are reasonably priced today, so there is room for upside. But mid- and small-caps will also attract smart money. Even today, many stocks were up 10–20%. So the participation will be broad, though the triggers may differ across segments.
On China+1 theme
Does the China+1 theme get a fresh boost now?
Definitely. India’s tariffs are now lower than almost every competing country—Bangladesh, Vietnam, China, Thailand, Brazil. That gives us a huge export advantage. With the trade deal, export growth can accelerate meaningfully.
You’ve often spoken about India’s macro strength. How do you see it today?
India’s macro is in excellent shape. Corporate balance sheets are strong. The country’s balance sheet is strong. The rupee appreciated by one rupee today. I often say India is like a talented teenager—full of potential. But the global environment plays the role of the parent. If the parents are stable, the teenager thrives. We have all ingredients for long-term growth are in place.
Corporate earnings have been moderate this quarter. What’s your outlook?
This quarter will be around 9–10% growth. But the trade deal removes a major overhang. The real test will be March quarter earnings. Ultimately, earnings are the only trigger left for the market. The negatives are largely behind us.
So what should investors watch out for now?
Earnings, earnings, earnings. That’s the only real driver from here. If earnings deliver, markets will follow.