Markets in wait-and-watch mode as earnings season kicks off: Sunil Subramaniam

"India is not there in the letter, but the noises are coming are mixed. On the one hand he says, I am going to do a big deal with India on the other hand he talks about India importing Russian oil that he will put a 500% surcharge, the other hand he says in the brics if you are going to promote de-dollarisation, I will slap another 10%," says Sunil Subramaniam, Market Expert.

We have barely seen any action on the index level over the last few days, perhaps everyone is waiting for some more action on the tariff war front, but what will your view be on the market and any sector specific ideas that you can share with us?
Sunil Subramaniam: We are just at the beginning of the earning season with later today the IT bigwig going to report. So, everybody is waiting with bated breath to see how the earning season pans out. Till yesterday the BTA was top of mind. But the news that is coming out over the last day or two that I do not think we are going to see a deal in a hurry because one is, of course, that Mr Trump has been issuing letters to whole bunch of countries.

India is not there in the letter, but the noises are coming are mixed. On the one hand he says, I am going to do a big deal with India on the other hand he talks about India importing Russian oil that he will put a 500% surcharge, the other hand he says in the brics if you are going to promote de-dollarisation, I will slap another 10%.

Then, he is talking about copper, pharma. So, there are mixed signals. And it is clear from the Indian side also, the trade secretary and the team are again going back to the US for talks. So, now the BTA has gone off the radar in the sense it is not going to happen immediately and even the noise coming around is that there is going to be a three-part deal.

There is going to be an interim deal, maybe over the next two weeks or so, then there will be a, what do they call, phase one deal by September-October and the real tough situations will probably take by end of year to solve. So, clearly the BTA does not look like it is happening in a hurry, that is the big change in the market over the last couple of days because the last couple of days everybody has been sitting up late saying is the deal going to be signed in midnight, midnight, and all of that, but clearly it is proved to be a false alarm.

So, to that extent whatever built up around the expectation of the BTA is going through some amount of corrections, so you are seeing that volatility. Second, you saw that the mutual fund inflows have come on very strongly. The SIP book has touched a record high. Plus, there is about 25% month-on-month increase in net flows into equity.

So, domestic fund managers obviously are sitting on a lot of cash, but they are not going to deploy it in a hurry because now the situation is going to be stock specific. Obviously, they will be wary about the export oriented because BTA if it is not going to get signed, then the uncertainty will continue. So, the focus will be clearly on the domestic sectors as opposed to export oriented sectors and within domestic, the two key things are supportive rate cut by the RBI and liquidity infusion, what is the effect on rate sensitives.

Second is the flow through of the one lakh crore of the tax savings to the middle class in the budget, where are people spending it or are they saving it. The initial reports from the banking side indicates that deposits are growing strongly and credit growth is not happening. So, eager to wait and see how the realty, consumer durables, discretionary items, auto, all of these numbers are they showing A) first of all a good topline growth and second, how the EPS. So, we are entering that phase where everybody is going to be very stock specific and look for key data like the bellwethers for example in it, they will lead the charge for the entire sector.

So, some of the big ones in sectors will probably set the direction, but my suggestion is that for the next two weeks you are going to wait and study these earning seasons. One good news which is there is that in the last quarter the guidances were very dim because of the tariff overhang, so that the actual numbers may turn out to be better than the guidances. So, to some extent there might be a positive fillip to the market from some of those counters. But like I said, we have to wait eagerly and watch the earnings season very closely now.

I wanted to have your take on the telecom space as well and specifically on Bharti Airtel because it is the second straight day where the stock has seen decline and for today it is actually the biggest loser on the Nifty 50 side. We know that how and what kind of a multibagger Bharti Airtel has actually been, but give us some sense that from here on what as per will make Bharti move more from these levels on the higher side because what is actually in the price is actually the subscriber addition that Bharti Airtel has shown, what they have done on the 5G front and their investment plans on the 6G and well, of course, on the AGR issue as well, they are not much impacted. Give us your sense on Bharti Airtel. What as per you could be the key growth drivers if at all?
Sunil Subramaniam: Well, I am sorry I cannot talk stock specific because I do not have a registration with Sebi and I do not track stocks as such.

Alright. But your take on the telecom space, still bullish?
Sunil Subramaniam: The overall telecom space I am bullish, but it is a very oligopoly. There are three players and one of them as you know is very challenged, seeking government support. The other one, of course, has been the aggressor and being a dedicated telecom players they are going to be much more volatile.

The penetration and the overall numbers for the telecom sector I am fairly bullish on, but how the competitive forces at play between the three big players there is very-very hard to say.

So, if you ask me, I would be a buyer in telecom, but I would then spread my investments across all the players there and not try to pick a winner, that is the best way because the moment you point out one as a loser you know that the other is a winner.

I am overall bullish on the space because penetration has still way to go and pricing power will be with them in the days to come, beyond that, like I said, I do not want to comment on specific stocks.