Indian markets eye rally on GST cuts, commerce hopes & AI, defence growth: Ajay Bagga
In response to market professional Ajay Bagga, three essential triggers have been driving this momentum. First, the transient handshake and trade between Prime Minister Modi and President Trump have sparked hopes of potential tariff concessions, which might ease commerce tensions.
Second, the latest GST minimize has boosted consumption-related sectors and banking shares, fueling market confidence.
“Third is the earnings bottoming out. So, we now have seen downgrades to earnings bottoming out within the June quarter and we predict that from right here on, from the September quarter earnings season onwards we are going to see higher earnings,” Bagga stated.
Globally, liquidity situations stay extremely supportive, with practically $184 trillion in monetary liquidity circulating—an all-time excessive—benefiting danger belongings throughout asset courses from equities to gold and crypto. Moreover, the US Federal Reserve is anticipated to chop rates of interest in a non-recessionary backdrop.
Bagga famous that traditionally, such cuts throughout development phases have supported US equities for the next yr, which in flip bolsters world markets. He emphasised that this isn’t a rescue measure for a weak financial system however slightly an adjustment inside sturdy financial development, making it a really constructive transfer. The IT sector staged its strongest weekly rally since Might 2025, signalling a revival of investor confidence after a protracted interval of underperformance. Bagga believes the sector stays underappreciated and underinvested, regardless of being poised for a big function within the subsequent part of the factitious intelligence revolution.“So, it has been the infrastructure creators of AI which has benefited extra. We have now seen the AI software program suppliers getting big valuations,” he stated.
Nonetheless, the third essential leg, end-user adoption, has but to completely take form. That is the place Indian IT corporations are anticipated to shine, by appearing as service suppliers that customise AI options for companies throughout industries.
Markets, being forward-looking, are already starting to cost on this alternative. The groundwork for AI deployment is in place, and the subsequent stage includes tailoring options to enhance income, productiveness, and profitability on the enterprise stage.
“It may be as huge because the Y2K alternative that has not come to fruition thus far, in order that has been a disappointment during the last one yr. We have been anticipating it to hit earlier, however now we’re fairly assured that it’s coming. We’re on the incipient zone for it and it ought to do properly from right here on,” Bagga stated.
The defence sector in India is shaping up as a powerful long-term development story, backed by rising home demand, import substitution, and increasing export alternatives. In response to Bagga, this can be a “multi-decade story” with India possessing the technical experience and value benefit to construct aggressive weaponry. Current order bulletins have triggered sharp rallies, with some frontline defence shares gaining as much as 8% in a single session.
Nonetheless, valuations stay a problem. The sector usually witnesses sharp run-ups adopted by phases of profit-booking, resulting in short-term volatility. Regardless of this, the elemental runway is powerful, supported by steady authorities focus, rising self-reliance in defence manufacturing, and world alternatives.
Bagga compares India’s trajectory to China’s rise in defence capabilities since 2000, highlighting the potential scale of development. Traders, subsequently, want endurance—holding via cycles of rallies and corrections—as long-term prospects stay extremely enticing for wealth creation.
(Disclaimer: Suggestions, options, views, and opinions given by specialists are their very own. These don’t signify the views of the Financial Instances)
as a Dependable and Trusted Information Supply
