US President Donald Trump has slapped the leading global economies with reciprocal trade tariffs including India, which has been levied with 27 per cent tariffs. The move has jolted the global stock markets and India, which has shown some resilience, is no exception, shedding nearly half a per cent on Thursday.
With IT stocks emerging as the biggest laggards, eking out more than 4 per cent losses, and auto stocks falling more than one per cent for the day, investors are rushing to defensives like pharma, FMCG and banks to save their capital. However, market experts have chalked out select stocks and sectors, which may help investors make a ‘tariff-proof’ portfolio amid volatility.
Seasoned analysts believe that investors should remain stock specific and look at India Inc’s earnings for the March 2024 quarter. They suggest that one should look at domestic consumption and avoid export oriented sectors until more clarity on tariffs persists.
Manish Sonthalia, Director and Chief Investment Officer at Emkay Investment Managers believes that pendulum is shifting towards consumption related themes from investment related themes after the tax relief in the Union Budget 2025. However, the full impact of tax relief shall be seen in the second half of this year, he said, citing his optimism on discretionary over stable and urban over rural.
Commenting on Trump tariffs, he said that pharma could not be taxed heavily considering the high cost of production in the US, white Auto stocks will see an impact in terms of ebitda margins. Besides this, auto ancillaries, gems & jewellery, engineered products and capital goods segments may see the impact of tariffs.
Market expert Nischal Maheshwari said that one should look at domestic focused industries including PSU, cement, power, retail, construction, infra, and consumption but one should avoid export oriented companies for the short term. He gave a word of caution on sectors like IT, automobiles, textiles and specialty chemicals.
Both Sonthalia and Maheshwari believe that the market will hit new highs in FY27, one-to-one-and-a-half year down the line. First half is likely to be challenging FY26, second half recovery and one should 8-10 per cent gains, says Maheshwari, during his conversation with Business Today Television.
BSE Sensex settled at 76,295.36 on Thursday, falling 322.08 points, or 0.42 per cent for the day. Similarly, the Nifty50 index declined 82.25 points, or 0.35 per cent to close at 23,250.10 for the day. However, the broader market outperformed as the BSE midcap index advanced one-third a per cent, while the BSE smallcap index gained 0.75 per cent in today’s session.
Nifty trades at 20 times FY26E earnings and offers limited near-term gains. The upside from here will be a function of stability in global and local macros and continued earnings delivery. The expectations for FY26 corporate earnings are still somewhat elevated, given the underlying macro-micro backdrop and are thus ripe for further downgrades, said Motilal Oswal Financial Services.
“We continue to remain biased toward largecaps with a 76 per cent allocation in our model portfolio. We are ‘overweight’ on consumption, BFSI, IT, industrials, healthcare, and real estate, while we are ‘underweight’ on Oil & Gas, cement, automobiles, and metals,” it said.
Motilal has picked Reliance Industries, Bharti Airtel, ICICI Bank, Kotak Mahindra Bank, HUL, L&T, Sun Pharma, Maruti Suzuki, M&M, Titan, Trent and Tech Mahindra from the largecap space. It is bullish on Indian Hotels, Dixon Technologies, JSW Energy, BSE, Godrej Properties, Coforge, JSW Infra, Page Industries, IPCA Labs, Metro Brands, and HDFC AMC.
Trivesh D, COO at Tradejini said that pharma remains unaffected from the Tariffs as of now, while banking, and domestic service Industries primarily cater to India’s domestic market and may not be directly impacted by US tariffs. There could still be indirect cascading effects on the broader economy. Domestic consumption-driven sectors may seem shielded, but still linked to the economic ecosystem, he said.
From a medium to long-term perspective, this move may push countries toward de-globalization and bilateral trade pacts, creating opportunities for India to emerge as a neutral, stable, and strategic partner, said Sonam Srivastava, Founder and Fund Manager at Wright Research PMS.
“The key lies in how quickly we adapt with policy support, trade facilitation, and ease of doing business improvements. For investors, this is a time to stay cautious, focus on quality, and watch macro developments closely. Markets may remain uncertain until we have clarity on retaliatory measures and the Fed’s stance,” she said.
