Speaking to ET Now, Matthews said, “I think it will start to happen in the next quarter. It did not happen in the current quarter because the GST cuts only really just happened in the last week of September and so people were waiting for that. So, we will have to be patient, I would say throughout the impending quarterly results, but beyond that I would expect an acceleration and numerous anecdotes are already showing us, we will see that. So, for fiscal year 27 which, of course, is the period beginning in March next year, we should look for around we think 16% to 18% earnings growth for the Nifty and if we are right, then that makes a strong case for the market to go up next year.”
When asked which sectors could benefit the most from the earnings upside, Matthews acknowledged the limits of his sector-specific insights but pointed to consumer stocks as likely winners. “I am sorry I actually do not have that many sector insights. I apologize. But I just say intuitively with these big cuts in the GST and the income tax, you would think that the consumer stocks would benefit the most. I think that there are so many interesting things to look at in the Indian market. I do not tend to be sector specific, but consumer is the one intuitively that you would expect to benefit from the changes to the tax regime this year and benefit from the decline in interest rates.”
On the global front, Matthews addressed recent US political developments, including the potential reversal of a government shutdown. He said, “I do not really think there is that many impacts for the rest of the world beyond sentiment. But if you look at surveys of what people are worried about, in fact, the government shutdown never figured highly I think because people rightly realized it would not continue for much longer and I doubt it will continue beyond the next few days. It seems they are coming to an agreement.”
He added, “The number one concern in America is that the labour market is rolling over and it is rolling over too quickly for the Federal Reserve to intervene in time to stop it. For the record, I do not think that concern is legitimate, but it has been catalysed by some private sector data particularly a job cut report from a company called Challenger Gray & Christmas which is an outsourcing company and they tabulated that there were 153,000 job cuts in October, that is what really catalysed this concern about the labour market and in the absence of government official data because of the shutdown, we are kind of in the dark.”
Matthews also highlighted other labour market indicators, pointing out that key statistics remain healthy. “But there are some other data to look at and the automatic data processing companies payrolls number is one which showed a healthy October. The Chicago Federal Reserve constructs its own estimate for unemployment which shows it is still at about 4.3%. And lastly, if you tabulate all of the state level initial jobless claims, that important labour statistic is just tracking nicely sideways. So, the government shutdown I do not think is going to last much longer and I do not think it is a big deal. The bigger deal is the concern over the labour market, but I also think that is overstated.”Market experts will now be keeping a close eye on the upcoming quarterly results and early FY27 trends, which could validate Matthews’ projections and provide direction for investors ahead of the next fiscal year.
