He explained that stronger nominal gross domestic product (GDP) growth is expected to improve business conditions and support a recovery in corporate earnings in 2026-27, with double-digit nominal growth becoming more likely this year, 2025-26 (FY26).
However, he cautioned that market valuations remain elevated, which may create challenges despite improving growth prospects.
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On global trade developments, Subramaniam said there is still limited clarity on tariff policies, making it difficult for businesses to plan long-term investments.
According to him, “you are completely out here in limbo because you don’t have an agreement that gives you visibility of taking large investment decisions.”
He added that this uncertainty affects entrepreneurs globally rather than being specific to India, although India’s lower dependence on exports limits the overall economic impact.
Subramaniam said global investors continue to view India as a premium-valued market compared with other emerging markets (EMs), even though valuation gaps have narrowed recently. While investor discussions around India have increased, he noted that this has not yet translated into strong capital inflows.
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Within India, he highlighted credit growth as an important driver of economic momentum. Credit expansion in the low-teens range could act as a key support for earnings growth and economic activity.
From a sector perspective, Subramaniam said banks and non-banking financial companies (NBFCs) offer exposure to economic growth trends, supported by credit demand and earnings visibility. Insurance companies may also see improvement after a period of muted performance, while capital market businesses face valuation constraints despite strong growth tailwinds.
He added that stock selection should focus on individual fundamentals rather than ownership categories such as public or private sector banks.
For the full interview, watch the accompanying video
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