The Indian stock market was cautious on Thursday amidst globally selling, as investors were concerned about the impact of US President Donald Trump’s counter -tariff, which threatens world trade and supply chains.
In this background, analysts suggest that investors bend their portfolio towards domestic-oriented defensive areas, helping them to provide stability and protect them from geopolitical and tariff risks.
In such a situation, Nomura Research prioritizes telecommunications, staples, food, beverages and hospitals and healthcare. According to brokerage, apart from these, banks and financial sectors are also good options as business stress will have less impact on them.
The major benchmark indices declined slightly after a decline of about 1 per cent during the market opening. After this, the market improved as brokerage companies like Bernstein Research emphasized that India would safely deal with the tariff challenges made by the US overnight. Brokerage companies also said that India could also benefit from China’s loss, which has raised the hope of foreign investment in a long time.
Pharmaceutical products and energy exports (which are collectively traded about $ 9 billion) are exempted from the new tariff structure. Copper, pharmaceuticals, semiconductors, wood, gold, silver and some energy products and minerals are free from import duties.
Analysts of Bernstein believe that the backdrop of widespread tariffs may affect the fate of areas such as apparel and auto parts. He said that India is protected from a competitive point of view, but in some areas the risk arises from a weak American economy, which is likely to be a recession.
As a strategy, Bernstein has upgraded the healthcare to the equal weight in view of its limited influence, and the information technology (IT) area has been downed into the Equal Weight due to the increase in the risk of American recession, which was earlier in the grade above.
According to Rajesh Palviya, Head of Technical Research of Axis Securities, there is a possibility of market fluctuations in the near future. They recommend to increase cash allocation by 10 per cent and to use the market fall in order to increase investment in high quality stocks.
Axis Securities remains overweight on large private sector banks, telecommunications, hospitals and interest rate proxy. He said, in addition to this, select capital expenditure-operated bets seem attractive due to their long-term domestic development possibilities, “he said. In contrast, we are retaining a downgrade trend on the IT sector as we are prone to continuous weakness in the discretionary IT spending in the US.
Kapil Gupta and Prateek Parekh of Nuwama have also given priority to defensive shares after Trump Tariff. He said that investors should be prepared for global risk. Brokerage is overweight on private banks and insurance such as insurance and low margin cyclic shares. Consumers, telecommunications and other favorite areas of Nuwama are Nuwama.
Nuwama also likes a lower margin cyclical region in cement, chemicals and quick-servis restaurants (QSR) areas. However, brokerage is underweight on cyclical areas such as industrial, metal and public sector undertakings (PSUs). It has also downed the IT in view of high relative evaluation.
The Trump administration replaced high tariffs with which the US has the largest trade deficit and imposed a 10 per cent Aadhaar tariff on all trading countries. The US President imposed a 27 per cent tariff on imports from India, which is 20 per cent on the European Union, 24 per cent on Japan and 25 per cent of South Korea. Meanwhile, China suffered a major setback, in which at least 54 percent of tariffs were imposed on many items.
First Published – April 3, 2025 | 11:08 pm IST
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