Anand Radhakrishnan, Managing Director of Sundaram Mutual Fund, projects a positive economic trend, anticipating that the benefits of interest rate cuts and a boost in consumption will gradually permeate the Indian economy. He suggests that monetary policy easing is set to invigorate both publicly traded and private companies by enhancing liquidity and making credit more accessible. Furthermore, consumption, which constitutes over half of India's economy, is expected to experience a significant uplift, driven by factors such as tax relief, declining interest rates, and the prospect of wage growth, including an impending revision for government employees. This positive trajectory is also supported by increasing investment from both government and corporate sectors.

Radhakrishnan highlighted the impressive resilience of the markets, which have managed to “climb the wall of worry” despite various challenges over the past six to eight months. Following a dip earlier in the year (January-March), markets in India and globally have demonstrated a strong recovery. Specifically for India, financial conditions have eased, marked by cuts in interest rates and the Cash Reserve Ratio (CRR), reduced risk weights in the banking system and for Non-Banking Financial Companies (NBFCs), moderation of inflation, and an improvement in wages, particularly in rural areas. High-frequency economic indicators such as GST collections and E-way bill momentum further corroborate this positive incremental data. Corporate performance for the fiscal year ending FY25 has also been robust, with a record number of companies reporting double-digit growth, collectively contributing to the overall market upswing.

Addressing future market triggers, Radhakrishnan emphasized that aggregate demand remains robust, citing GST collections, which have consistently shown mid-teen growth, as a strong indicator. While there are isolated pockets of slowdown, the overall situation is healthy. He reiterated that the trickling down effects of rate cuts will foster improved financial conditions for companies, potentially leading to an uptick in corporate loan growth, which has been somewhat tepid. On the consumption front, a more decisive positive trend is expected, impacting both urban and rural demand, given the alignment of multiple economic factors.

Globally, the US market’s response to tariff discussions was also noted. Radhakrishnan observed that initial jitters surrounding tariffs have largely dissipated, partly due to the US government’s rollback on some issues and extended timeframes. He suggested that the US administration appears keen to moderate interest rates, and tariffs could be an impediment to achieving this goal, especially if inflation moderates. This implies a potential pressure to moderate tariffs to pave the way for rate cuts, which would provide a tailwind for economic growth, a critical imperative even for developed economies like the US. This global sentiment, coupled with domestic factors, positions markets favorably.