Use this tariff-driven market dip to buy stocks, current downturn is only temporary: Madhusudan Kela

Madhusudan Kela on tariff impact

The current downturn in the stock markets is only temporary, and investors should use this dip to buy stocks which have undergone strong price correction, said market expert Madhusudan Kela. This comes after benchmark indices Sensex and Nifty dropped nearly 1 percent each after US' 50 percent tariff on Indian imports came into effect from August 27.

Speaking to CNBC Awaaz, the founder of MK Ventures noted that such long relations between two countries cannot be derailed over minor disagreements. Kela expressed hope that trade negotiations between India and US would eventually be concluded, saying it was only a matter of time before the current uncertainties are resolved.

The market expert added that government has clearly indicated that it is using this time as an opportunity to bring more reforms, including deregulation, increasing ease of doing business and more. "Prime Minister Narendra Modi has handled several such crises in the past in a very decisive way. I don't think there is anything to worry that much about," he added.

Kela noted that more than half of India’s exports to US do not fall under the 50 percent tariff slab, adding that he expects majority of generic pharma exports to not face any tariff hikes. India’s strong population, and its growing demand can help absorb the impact, he said.

“Big issue is being made out it, and it will soon be resolved. I don’t see any reason for weakness in the market till this domestic holding remains strong. Some sectoral indices may be impacted. But Nifty 50 doesn’t include any such stock. Even in the broader markets, there are not too many stocks that may be impacted. There may be temporary challenge in certain pockets,” he added while speaking to the news channel.

Kela said that four to five months later, investors will look back at this time as an opportunity to have invested in equity markets. "After such a massive rally, I don’t see the current temporary downturn as a cause of worry," he added.

Sensex dropped more than 700 points (nearly 0.9 percent) to close at 80,080 on Thursday. The benchmark index has now fallen over 1,500 points in just two sessions. Nifty 50 meanwhile fell over 200 points (0.85 percent) to close at 24,501.

Also read: Our LIVE blog on stock market updates

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.