Investors should remain cautious, adopt 'wait and watch' approach amid market sell-off: Experts

Two key triggers ahead: Q4 earnings season and RBI's MPC meeting.

The frontline index crashed over five percent during the April 7 session, as crores in wealth were wiped off on the bourses, as the risk-off sentiment continued. The fear gauge, measured by the India VIX, zoomed 55 percent as uncertainty and volatility gripped the markets. During this time, experts suggest that investors should adopt a cautious approach.

The markets are hit with heightened uncertainty amid U.S. President Donald Trump's tariffs, which have caused turbulence across international stock exchanges. However, the President refused to back down from his stance, calling the sour market sentiment 'medicine' that needs to be taken.

Currently, there is a lot of uncertainty over who bears the brunt of the tariffs, the status of goods
in transit, global commodity prices, retaliatory measures, US inflation, the rate cut trajectory
going forward, and potentially a global slowdown, noted JM Financial.

Also Read | Monday mayhem! Sensex crashes over 2,500 pts, Nifty hits 10-month low amid global trade war fears

As a result, analysts are suggesting that investors should 'wait and watch' as the tariff narrative plays out. As volatility skyrockets, Kranthi Bathini, Equity Strategist at WealthMills Securities, state that the tremors felt across markets is completely unprecedented.

However, Bathini noted that the jolt is felt across international markets, it is not India-specific. Instead, India is more insulted than other companies during the global down-turn. As a result, he suggested that risk-friendly investors could considered domestic-focused stocks and sectors. "India's consumption theme is still on, select domestic consumption stocks can be considered. Further, local infrastructure, railways, and defense sectors also look good," he noted.

Offering a silver lining, V K Vijayakumar, Chief Investment Strategist, Geojit Investment said, "There are a few things that investors should keep in mind. One, the irrational Trump tariffs will not continue for long. Two, India is relatively better placed since India’s exports to the US as percentage of GDP is only around 2 percent and therefore the impact on India’s growth will not be significant," he said.

He added that at the current juncture, domestic consumption themes like financials, aviation, hotels, select autos, cement, defence and digital platform companies are likely to come out relatively unscathed from the ongoing crisis.

Volatility brings opportunity, but only with strong risk management. Use proper stop-losses and position sizing. Monitor global cues like the US markets and crude. Focus on process over profit, and don’t hesitate to lean on trusted communities or analysts for clarity during uncertain times, shared Pranay Aggarwal - Director & CEO of Stoxkart.

Going ahead, apart from the tariffs, there are two key triggers for the markets: the upcoming Q4 earnings season, along with the RBI's monetary policy committee meeting that kicked off today.

The RBI is expected to tweak the benchmark lending rate, according to analysts, which could benefit rate-sensitive sectors such as banks and NBFCs. Further, the earnings season ahead is unlikely to boost sentiment, with India Inc.'s report card likely to result in more downgrades.

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