From GDP surge to GST cuts: Mansi Patel of Purnartha PMS on next market opportunities in India

India’s economy is growing at a steady pace despite global headwinds, and investors are keen to know what lies ahead for equities. In this conversation with BT, Mansi Patel, Head – Investment Counsellor (Institution) at Purnartha PMS, shares her views on the latest GDP numbers, Q1 earnings, global risks, and key investment opportunities. She also explains the impact of India’s rating upgrade and GST rate cuts, highlighting where investors should focus in the near to medium term. Edited excerpts:

1) The Indian economy grew at 7.8% in Q1FY26. What does it indicate for the equity markets?

This was the fastest growth in five quarters, driven by government spending, agriculture, and construction, with support from GST collections and aviation cargo. Domestic demand remains strong, though weak exports and higher US tariffs are risks. For now, investors may focus on real estate, infra, capital goods, banking, and consumer discretionary. The test will be sustaining growth in the face of global pressures and upcoming US tariffs that could hit exports and jobs.

2) How do you read the Q1 result season? Which sectors performed well?

Even though the economy is growing, demand has recovered unevenly across industries, particularly in the financial, IT, and export-related sectors. Sectoral performance in the first quarter of FY26 has been highly variable. Strong pricing power and operating leverage helped the cement industry stand out with an extraordinary surge, recording nearly 47% profit growth year over year.  With stable crude prices and healthy margins, utilities and oil and gas companies both produced strong results, with utilities growing 13% and oil and gas companies growing 7%. The BSE-500 index dropped by about 2% in August due to weak earnings and worries about global trade, while technology, BFSI, FMCG, and IT saw muted growth, marking the slowest revenue and profit expansion in nine quarters as demand remained sluggish.  However, stocks of durables, consumer discretionary goods, and automobiles fared better.

3) How is the Indian equity market positioned amid global volatility?

India’s growth story is supported by consumption, government spending, strong tax revenues, and healthy corporate balance sheets. Financials, autos, capital goods, and manufacturing remain strong bets. But global headwinds—geopolitical tensions, crude oil swings, and global rate decisions—could spark volatility. Mid- and small-caps look expensive, so a bottom-up stock-picking approach is better than chasing the broad market.

4) What global risks or tailwinds are shaping investor sentiment?

On the positive side, financial conditions are improving, and global growth forecasts are inching higher, which supports risk-taking and benefits domestic cyclicals. Risks stem from US tariffs on Indian exports, trade frictions, and uncertainty over Fed policy. Exporters in textiles, engineering, and auto components may face near-term stress, delaying capex. Markets are leaning towards rate cuts, but if inflation surprises, global yields could stay high, keeping pressure on EM flows.

5) What are the next big opportunities in India’s capital markets?

The sweet spots over the next 2–3 years lie in capital goods, clean energy, EV components, scalable IT services, financial products, and niche manufacturing. Healthcare and specialised manufacturing are also under-owned but promising. India is benefitting from the China+1 shift. Across sectors, strong balance sheets, prudent capital allocation, and proven management execution will separate winners from laggards.

6) How will India’s rating upgrade impact FPI inflows and valuations?

The S&P upgrade signals better fiscal health, boosting India’s image as a safer investment destination. In the short run, it should lift sentiment and support large-caps and capital-heavy sectors like banks, infra, and energy. Borrowing costs may ease slightly too. While global factors such as US rates and currency moves could cap immediate inflows, over the medium term, the upgrade strengthens India’s case for more long-term FPI participation and higher global index weights.

7) Recently the GST rate cuts are announced, which sectors or companies stand to benefit the most, and how should investors position themselves?

Mass-consumption items like packaged foods now face a reduced GST rate of 5% (from 12%), while categories such as autos, cement, and durables have been rationalised from 28% to 18%. while keeping the 40% rate for luxury and sinful goods.

From the standpoint of an investor, this might present strategic opportunities: FMCG should experience consistent volume growth, consumer durables could gain from improved penetration, and automobiles and cement stand out for an instant demand boost.

In fact, several macro and policy tailwinds have begun to favour the consumption space in the last few quarters. Interest rates have already been lowered, consumer and food inflation have reached multi-year lows, and an income tax refund went into effect in April. Thus far, the monsoon has been marginally above average, which should help rural consumption even more.  All these indicators point to strong rural demand, and any reductions in the GST rate may serve as an extra stimulant for industries driven by consumption