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The tariffs announced by the Trump administration have caused a significant upheaval in global markets. US-based giants like Goldman Sachs and JP Morgan have already raised alarms about the increasing chances of a recession in the US market.
So, is the global economy heading towards a recession? What does this mean for Indian markets, and how should investors and distributors navigate the current situation? Here’s what experts from prominent Indian AMCs have to say:
A Balasubramanian, MD & CEO, Aditya Birla Sun Life MF noted that the tariff announcements by Trump have raised uncertainties regarding trade dynamics and inflation, leading to concerns over global growth and economic stability. However, he adds that India’s domestic fundamentals remain strong, with a large economy that is minimally affected by these tariff changes. Additionally, he believes falling oil prices could help reduce inflation, potentially leading to rate cuts that would support growth. While the market has experienced sharp declines—erasing 1 to 1.5 years of gains—such volatility is typically short-lived. India could remain insulated from global shocks, thanks to its robust domestic economy and proactive policymaking.
In a note, Axis MF stated that sectors such as pharmaceuticals, automobiles, machinery, electrical goods, and gems and diamonds will be most impacted by the tariff announcements. The firm also mentioned that tariffs could make Indian exports more competitive compared to those from China and Vietnam, with Indian apparel exporters potentially benefiting from the China+1 policy.
Chirag Mehta, CIO, Quantum MF believes there is a probability of a global recession due to Trump’s tariffs, as they may impact growth and inflation across many countries. However, he adds that if nations can negotiate favorable tariff rates, this scenario could be avoided.
He also noted that tariffs have little impact on India’s exports. In fact, he sees the current market as a good opportunity for long-term investors. He mentioned that large-cap stocks are reasonably valued following recent corrections, and that domestic-driven sectors could benefit more than export-driven sectors in this environment.
Nikhil Rungta, Co-CIO (Equity), LIC MF feels that if the global economic situation continues to worsen, it could lead to a short-term slowdown in global trade. However, since the US market relies heavily on the services industry, a reduction in manufacturing trade may not trigger a recession in the country but it could cause a temporary blip.
He also foresees that reduced US trade might spur an increase in bilateral agreements and Free Trade Agreements (FTAs) between countries, potentially creating opportunities for India. He advises MFDs to inform their clients that this is short-term volatility and recommends staying invested, choosing funds that align with their goals and exercising patience.
Nimesh Chandan, CIO, Bajaj Finserv MF said that in their current form, the tariffs could lead to inflation for US consumers and put pressure on the profits of US companies with global supply chains. This uncertainty may also delay US capital expenditure decisions until there is clarity on the final tariff rates post-negotiation.
He concludes that the possibility of similar tariffs being imposed by other countries on US exports increases the risk of a recession in the US. However, he adds that it is likely the US government will negotiate these tariffs to avoid a significant slowdown in global trade.
Siddhant Chhabria, Associate Fund Manager, Mirae Asset MF remarked that it is too early to definitively comment on a global recession, as the situation is evolving with many moving parts. He adds that India is relatively better positioned compared to other economies due to its lower share of exports to the US as a percentage of GDP. He also believes that India will benefit from lower crude prices and its domestic-focused economy. He advises investors to focus on large-cap stocks over mid and small caps and to continue investing via SIPs to capitalize on the current market volatility
