Market View: Tariff aftershock may continue in the market, volatility will be seen in the short term:

As regards market speculation, Trust Mutual Fund’s CIO, Mihir Vora, states that there will likely be volatility for the time being. There will be reverberations in the market aftershock of RECIPROCAL TARRIF War because it will invoke counter negotiations even post the 90-day period. This is precisely why there will be volatility in the short term. He added that there was a fallout in the bond market, after which the US implemented the RECIPROCAL TARRIF 90 day waiver. His interpretation is that Trump's decision will lead to the tariff war being resolved much sooner than expected and may in fact result in an immediate response rather than waiting 90 days. The situation underlines the concern that without a significant reduction in the US fiscal deficit, bond pricing will increasingly become a concern. There is excess inflationary pressure in the US economy… But then, Trump also cut taxes and did not touch the fiscal deficit which, if left unchanged, will lead to persistently high bond yields.

Mihir Vora stated that if the world is heading towards a slowdown, then there is a possibility of a lot of liquidity pumping (pulling) of funds. Because the weakness in the dollar and the rise in gold is clearly showing this to us. Countries like India which are less dependent on exports may get risk flow and risk assets. This may, in turn, mitigate the reduction of the Indian markets. Nonetheless, volatility might still be present.

The track and expectation of Q4 earnings is lower than what is expected.

While talking about Q4 earnings, Mihir Vora explained that the market has already set a low expectation cap on Q4 earnings, with single digit Nifty earnings projection as the expectations. The focus is on June cap of April (FY26?) And ‘I think it will be key for the market’. So after the valuation correction that happened from September to February, the market does not seem to be too concerned about Q4 earnings. One thing is certain—it will be important for the market, and there are expected to add inflation.

Negative outlook on IT companies

While discussing the IT sector, Mihir Vora has commented that IT valuations are cheap, but structurally he is negative about it. This is so because the large-cap IT companies pre-Covid earnings and topline growth was in single digits. I feel that the business model of the large-cap IT companies is obsolete. It's likely that large-cap IT companies will struggle to achieve even 10-15 percent growth. In that scenario, large-cap IT companies will only show single digit growth.