MC EXCLUSIVE  Rajeev Thakkar on India-US trade deal: ‘Tariffs don’t change valuations’

Rajeev Thakkar

• India-US trade deal reduces market uncertainty, impacts limited sectors.
• Short-term gains expected in textiles, gems, jewellery, and shrimp exports
• PPFAS maintains defensive stance; valuations drive asset allocation, not tariffs

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The India–US trade deal may remove a major overhang for markets, but it is unlikely to alter long-term investment strategy or valuation-driven asset allocation, according to Rajeev Thakkar, chief investment officer at PPFAS Mutual Fund.

“There was simmering tension because of the trade deal. It’s good that this is now out of the way,” Thakkar said. “But the impact will be limited to a few sectors. Larger export-oriented segments such as IT and pharma were largely outside the tariff framework anyway.”

Thakkar said any immediate market reaction driven by tariff adjustments is likely to be short-lived. “Whatever has to happen because of tariff changes will play out in a day or two. It cannot drive markets for six months. After that, conversations around growth and valuations will take over,” he said.

Despite the positive sentiment trigger, PPFAS has not altered its defensive positioning. “We are currently holding about 22% cash. The tariff deal by itself is not enough to change that view. Our cash levels are driven by valuation opportunities, and valuations do not change because of tariff announcements,” Thakkar added.

He expects selective gains in a narrow set of export-linked sectors. “Textiles, gems and jewellery, shrimp exporters and similar segments may see an upward correction. But most listed companies are either domestically focused or operate in segments such as IT and pharma that are not meaningfully impacted by tariffs,” he said.

Markets are set to open with a gap-up after India and the United States announced a trade agreement that reduced reciprocal tariffs and eased months of uncertainty that had weighed on investor sentiment, foreign flows and the rupee. While traders expect near-term relief for export-facing sectors, fund managers remain focused on broader factors such as earnings visibility, valuation comfort and global risk appetite in determining portfolio strategy.