According to Pawan Bharaddia of Equitree Capital, if China continues to face higher duties and other countries follow suit, India could emerge as a preferred destination in the global supply chain. That may present an opportunity for Indian companies involved in contract manufacturing or value-added exports, he believes.
So broadly, Equitree remains positive on domestic manufacturing, engineering, ancillaries, and consumption, aligned with themes like "Make in India" and supply chain diversification out of China, said Pawan in an interview to Moneycontrol.
As far as the earnings is concerned, he is of the view that the real impact of tariffs will start becoming visible over a period of time, once things begin to settle. In fact, tariff-related impacts are more of a medium-term risk at this point, said the Co-founder and CIO of Equitree Capital.
Do you think tariffs are one of the major factors behind the likely low double-digit earnings growth expected this financial year?
I believe the real impact of tariffs will start becoming visible over a period of time, once things begin to settle. Right now, we’re still at an early stage — negotiations are ongoing, and the full picture is yet to emerge. It may take atleast 6 to 9 months before we clearly understand how it plays out. What could have a more immediate bearing on earnings growth is the broader economic environment — slowing consumption, potential economic softening, and related factors. These may weigh more heavily on the low double-digit earnings trajectory than tariffs at this stage. Tariff-related impacts are more of a medium-term risk at this point.
Are you hopeful that the tariff rates announced on April 2 will be revised downward, and that several exemptions will be granted, especially in light of recent decisions by the Trump administration?
It's extremely difficult to make a definitive comment at this point. However, looking at the early signs — countries reaching out to negotiate — there does seem to be a possibility of downward revisions in some cases. From India’s perspective, there have been news flows suggesting a willingness to explore duty reductions on certain items. So yes, if negotiations progress in the right direction, we may see downward revisions, at least in selective segments. It won’t be a complete blanket rollback — we’re likely to see sector-specific exemptions depending on the nature of trade dependencies and strategic interest.
Do you believe the major rally in gold prices has already played out, or do you expect gold to continue performing well in the current financial year?
Gold has witnessed a sharp, sudden rally recently, from around $2,980 to $3,327 per troy ounce in just 10 days. This spike has largely been driven by the uncertainty post the tariff announcements. That said, given this sharp increase in gold prices, a technical pullback can’t be ruled out. However, with the broader environment still clouded in uncertainty, gold may continue to hold its ground or even see further strength in the near term.
Given the recent sharp recovery, do you think the market is now largely unconcerned about tariff risks and has already priced in a tariff bottom?
Probably yes. Two things that have contributed to this sentiment are: First, the 90-day pause has offered some breathing space, indicating that any tariff escalation might be slower or more measured. Second, the reduction from the earlier proposed 25% to around 10% for most players suggests that the worst-case scenario may have been averted. So, to an extent, the market seems to have priced that in.
However, what remains to be seen is the second-order impact. Even with a 10% tariff, someone has to bear that cost. If it translates into inflation in the US, it could dampen consumption there. So while the market may have found temporary relief, we’ll need to monitor how the situation evolves over the next 6 to 9 months. There are still several moving parts that could influence the broader outcome.
Do you foresee a substantial downside risk to US economic growth?
I think now everyone, including FED, is waiting for things to evolve and see which way these maneuvers. Much of this depends on how the price increase plays out and whether they're offset by proposed tax cuts from the Trump administration. If those tax cuts materialize, they could boost disposable income and cushion the impact of higher prices, thereby supporting consumption. As things stand, there are still too many variables in play. We'll have to wait and see how it all unfolds.
What are the key investment opportunities in terms of sectors in the post-tariff scenario?
There are two broad themes here. First, businesses that are domestically focused — especially in areas like infra-ancillaries, select consumer plays, defense etc. — are relatively insulated from global tariff dynamics and could continue to do well.
On the export side, the impact may be uneven. Companies dealing in commoditized products or acting as converters with low margins (say 5–6 percent) could be hit harder. In contrast, exporters offering niche products with high value-add — particularly those with a technological edge — are better positioned. For instance, engineering exports with strong design or IP components may face limited disruption.
If China continues to face higher duties and other countries follow suit, India could emerge as a preferred destination in the global supply chain. That may present an opportunity for Indian companies involved in contract manufacturing or value-added exports. So broadly, we remain positive on domestic manufacturing, engineering, ancillaries, and consumption, aligned with themes like "Make in India" and supply chain diversification out of China.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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