US President Trump's 90-day tariff pause spurred global equities on April 10, with GIFT Nifty holding well above 23,100 to indicate a gap up start of nearly 3% as of 5:30pm.
Earlier in the trading session, Asian indices staged a solid recovery, with Nikkei and Taiwan Weighted index closing over 8% higher, and leading European indices DAX, CAC 40 and FTSE rising between 4-6%. On April 9, Trump's tariff pause had sparked a massive rally in US indices, with the S&P 500 recording its biggest rise since 2008.
Several market veterans are advicing investors not to be deterred by the volatility and stick to asset allocation, as a host of sectors that had taken the sharpest knock in recent weeks look set to rebound when equity markets open on April 11. N Jayakumar, MD at Prime Securities, during a panel discussion on CNBC Awaaz said it will be difficult to catch such gap ups, which are becoming challenging to predict, in present times. He said India's export plays are likely to emerge as beneficiaries over the medium term. "In this China-US standoff, India's exports will take off, as we see new trade blocs emerge, given the trust deficit with US President Trump," Jayakumar added.
Pharma sector is an opportunity to buy for Jayakumar, who said that Trump's threat of tariff on drug makers is more aimed at the Big Pharma based out of Europe, and the dumping into US by China. India's generic manufacturers are largely going be escape unscathed from any levy on pharma, given that the American public may end up bearing the brunt of a potential rise in prices of medicines, said Jayakumar.
With the support coming in from the central bank in terms of rate cuts, he said banks too could be a big beneficiary of the domestic growth story, and he sees valuation comfort in the banking space.
The low of 22,000 on Nifty 50 this week was also the low seen in February, and has largely been durable, despite the global jitters. "Can this be a meaningful low? 21,900-22,000 seemed to me to be a durable low. Despite the tariff shock, this low has held up. So, 21,900-22,000 can be seen as a floor and we feel this is a big support for the market, as in the recent past, we only breached it in intraday only," he added.
Prashant Khemka, founder and MD of WhiteOak Capital told CNBC Awaaz that the tariff turmoil has meant that volatility is now a part and parcel of the game. He too concurred that the tariff threat on Pharma is only a negotiation ploy, and Indian companies would be relatively better off. He said not positioning his portfolio as per the tariff announcements was a deliberate strategy. "No doing anything was our strategy in this short-term volatility. No one has a formula to profit from this."
"One can assess their portfolios to weigh the risks of loss relative to the benchmark," Khemka said, adding that a balanced portfolio is needed in such times.
Nilesh Shah of Kotak AMC said since India had relatively fallen less since the tariff imposition by the Trump administration, the scope for rebound too will be lower. Going forward, the focus of the markets will shift towards earnings, as the street gets used to tariff-related volatility. Aside of earnings, Nilesh Shah cited four key factors that could define the market trajectory going forward, namely, income tax relief in budget, fall in oil prices, the rate cut by RBI and next year's pay commission recommendations. Shah said tax relief announced in the Union Budget is a 'silver lining' for the consumption names. Crude oil prices, which have sharply fallen to the range of $55-$60 per barrel could mean there is the possibility of a fuel price cut some time in the near future, said Nilesh Shah. He also credited RBI's 50 bps rate cut this year as a measure that could mean the EMI burden may ease as rate transmission unfolds, adding to the consumer's spending power.
Nilesh Shah adviced investors to follow asset allocation as per their risk appetite and investment goals. The length of their SIP will define the market returns, he said.
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