SOURCE : NEW18 NEWS
Last Updated:April 05, 2025, 13:12 IST
Analysts say ‘this market environment is ideal for starting investments through SIPs in mutual funds’. On sectors, they say investors should avoid IT, metal and other cyclical sectors; and focus on FMCG, finance, and pharma.
After the ‘reciprocal tariffs’ imposed by US President Donald Trump across countries, analysts expect the US economic to fall into recession.
Even as fears of a recession in the US economy deepens amid tariff war, analysts advise Indian investors to remain cautious and not panic. They said this market environment is ideal for starting investments through SIPs in mutual funds. For stock-specific investors, the analysts said they should avoid IT and metals as of now and focus on FMCG, pharma and finance as these sectors are showing relative strength.
“Amid ongoing fears of a recession, Indian investors are advised to stay cautious but not panic. It’s important to maintain a balanced approach in the current market scenario,” said Swapnil Aggarwal, director of VSRK Capital.
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US President Donald Trump on Wednesday imposed ‘reciprocal tariffs’ across countries, including 27 per cent on India, on the majority of goods coming into the US, from April 9. Following this, analysts expect the US economic to fall into recession.
US Recession Fears: What Should Indian Investors Do?
Analysts advise Indian investors to remain cautious, not panic, during the current market environment. They suggest that sectors such as IT and metal should be avoided as of now amid the US recession fears.
VSRK Capital’s Swapnil Aggarwal said it is prudent for Indian investors to avoid sectors such as IT, metals, and other cyclical stocks for now, as they may remain under pressure.
Focus should be directed towards sectors like FMCG, pharma, and finance, which are currently showing relative strength and resilience, he added.
“For long-term diversification, Nifty Junior (Nifty Next 50) and Nifty ETFs are good options, although they may witness some short-term volatility. This market environment is ideal for starting investments through SIPs in mutual funds, which can help navigate volatility and build wealth steadily over time,” Swapnil said.
Vinod Nair, head of research, Geojit Investments Ltd, also said that after the imposition of higher-than-anticipated tariffs by the US, sectors like IT and metals have underperformed relative to the broader market, reflecting growing concerns over the outlook for the US economy and potential retaliatory trade actions by other countries.
“Investors are expected to closely monitor any countermeasures implemented by global trade partners, which could further exacerbate geopolitical and economic uncertainty,” Nair added.
Jitendra Sriram, senior fund manager at Baroda BNP Paribas Mutual Fund, said, “We may not see tone down of earnings as a direct impact of tariffs given that the potential industries/companies may not be significant index components, but second order impact on account of slower economic growth in USA itself cannot be ruled out.”
The second order impact will weigh on sentiment in areas like IT services. These are likely to be more driven by the trend on discretionary spending in the US hereon, he said.
“The tariffs are negative on the margin with incremental negatives emerging on industrial / equipment exports, chemicals, textiles and fisheries potentially,” Sriram added.
The way we would approach this is to look at sectors that are more domestic facing versus those that are more export facing. However, there are certain sectors such as energy (oil marketing companies) which are positively impacted by areas such as softer crude, he said.
After the US tariff impositions, Indian markets came under heavy pressure and declined by nearly one and a half per cent, largely weighed down by weak global cues. After two days of lackluster movement, the Nifty on Friday slipped below its key support level of 23,100 in early trade and continued to drift lower, eventually settling at 22,904.45. Most sectors witnessed significant pressure, with metals, pharma, and energy being the worst performers. The broader indices, which had outperformed in the previous sessions, saw a sharp correction, plunging between 3% and 4%.
The Trump Tariffs & US Recession Fears
US President Donald Trump on Wednesday imposed ‘reciprocal tariffs’ across countries, including 27 per cent on India, on the majority of goods coming into the US, from April 9.
Though the pharma sector has so far been left out from tariffs, Trump has hinted at possible trade measures on the sector saying, “Pharma is going to start coming in at, I think, a level that you haven’t really seen before”.
Following the tariff announcements, analysts expect the US economy to face recession. JPMorgan Chase & Co said it expects the US economy to fall into a recession this year following the tariffs announced the Trump administrations.
“We now expect real GDP to contract under the weight of the tariffs, and for the full year (4Q/4Q) we now look for real GDP growth of -0.3%, down from 1.3% previously,” the bank’s chief US economist, Michael Feroli, said Friday in a note to clients, referring to gross domestic product. “The forecasted contraction in economic activity is expected to depress hiring and over time to lift the unemployment rate to 5.3%,” Feroli said.
Importantly, following Trump’s tariff announcements, China has also announced a retaliatory 34 per cent tariffs on US imports, effective April 10.
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
