Daily Voice: Don’t foresee Nifty falling significantly below June 2024 lows, bullish on gold since 2020, says Ashika Global's Amit Jain

Do you expect the market to hit the June 2024 lows or fall much below them, considering the tariff-led global rout?

While the recent tariff announcements have triggered a wave of global risk-off sentiment, we don’t foresee Indian markets falling significantly below the June 2024 lows unless the situation escalates sharply or leads to a full-blown trade war. India’s market fundamentals remain intact, supported by strong domestic consumption, robust corporate earnings, and healthy macro indicators.

The sectors directly impacted by tariffs—like textiles and auto components—may see near-term pressure, but broader indices are likely to find support from domestically-driven sectors such as Banking, Infrastructure, and FMCG. Moreover, with Indian pharmaceuticals escaping the brunt of US tariffs, a major export engine remains intact.

In our view, this correction, if it deepens, should be seen more as an opportunity to accumulate quality stocks at better valuations than a sign of structural weakness in the market.

What is the possibility of Donald Trump reversing his tariff decisions, as this would have a significant impact on global trade?

The possibility of Donald Trump reversing his tariff decisions will largely depend on the geopolitical climate and how global markets and trade partners react in the coming months. Historically, Trump has used tariffs as both a negotiation tool and a political lever, often adjusting his stance based on economic feedback and diplomatic pressure.

If these tariffs begin to materially hurt US businesses—especially import-dependent sectors like retail, autos, and pharmaceuticals—there could be internal pressure to recalibrate. Additionally, any adverse impact on inflation or consumer sentiment in the US might push the administration to soften its stance.

That said, a complete reversal seems unlikely in the near term, especially with the campaign narrative built around protecting American jobs and enforcing trade reciprocity. From India’s standpoint, it would be prudent to prepare for a prolonged period of trade uncertainty while staying agile to capitalize on any softening of US policy later in FY26.

Do you believe the US will enter a recession if Donald Trump sticks to his tariff decisions? Will there be further corrections in US markets in the days to come?

If President Trump sticks to his tariff stance, the risk of a US recession rises considerably. Major banks have already raised their recession odds to around 60%, as tighter financial conditions and reduced business confidence start weighing on the economy.

Markets have reacted sharply - over 10% wiped off the S&P 500 in just two days and further corrections are very much on the table if trade tensions escalate. While the long-term intent may be strategic, the short-term pain is real, and investors should brace for continued volatility in the weeks ahead.

If Donald Trump sticks to his tariff decisions, do you expect the global trade war to intensify further?

If Trump holds firm on his tariff decisions, the chances of a broader global trade war intensifying are quite high. Other major economies are unlikely to stay passive—they may respond with countermeasures or retaliatory tariffs, leading to a tit-for-tat cycle. This would disrupt global supply chains, increase costs across industries, and weigh on global growth sentiment.

India could feel both the heat and opportunity. While some export sectors may face short-term setbacks, this environment could accelerate the global shift toward China+1 strategies, offering India a stronger position in global manufacturing and sourcing. But make no mistake, if tensions escalate, markets will remain on edge, and trade stability could take a backseat in the near term.

Where would you bet to capitalize on this market turmoil?

In this volatile environment, we’re betting on India’s domestic strength. Banking, capital goods, and infrastructure remain attractive, driven by strong fundamentals and government spending. FMCG is also a key pick, offering defensive growth with improving rural demand and stable margins.

We’re cautious on US markets given recession risks and ongoing trade tensions. This is a time to stay selective - backing quality, cash-generating businesses with minimal global exposure.

Is it the right time to bet on gold?

Yes, we have been bullish on gold since 2020, it is gaining its shine as a strategic asset amid rising global uncertainty. With tariff tensions escalating and recession risks in the US increasing, investors are turning to gold as a safe haven. Central bank buying remains strong, and if the Fed delays rate cuts, that could further support gold prices.

For Indian investors, a modest allocation to gold - around 10-15 percent of the portfolio - can offer both diversification and downside protection. Whether through ETFs, sovereign gold bonds, or digital gold, it's a smart hedge in today’s volatile environment.

Do you expect the RBI to implement more than a 25 bps cut (e.g., 35 bps or 50 bps) in the repo rate on April 9 to support the economy, given that inflation is still below 4% and oil prices are under pressure?

Given the current economic indicators - subdued inflation below 4 percent and declining oil prices - the Reserve Bank of India (RBI) is widely anticipated to implement a 25 basis points (bps) cut in the repo rate during its April 9 meeting, reducing it to 6.00 percent. This move aligns with the RBI's recent shift towards supporting economic growth amid global trade tensions and domestic challenges.

While there is a small possibility of a more aggressive cut of 35 bps, the consensus among economists leans towards a 25 bps reduction. The central bank is likely to maintain a neutral stance, allowing flexibility to respond to evolving economic conditions. Future rate cuts will depend on the trajectory of inflation, growth metrics, and external factors such as ongoing trade disputes and their impact on India's economy.

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