Synopsis
Stock Market Update: US Tariff Hike Cancellation Sparks Big Rally
US President Trump’s 90-day tariff pause, excluding China, has sparked the biggest US stock rally since 2008. The news has lifted sentiment and raised hopes for foreign inflows and trade agreements, despite economic uncertainties.
Indian Markets Bounce Back
Indian markets, which were shut for a holiday, may see gains on Friday. The cancellation of US tariffs has created a positive market environment, with investors expecting a revival of foreign portfolio flows and trade hopes.
Fund Managers Share Insights
- Rajeev Thakkar, chief investment officer, PPFAS Mutual Fund, is looking for bargain buys among well-run companies with beaten-down prices.
- Sankaran Naren, CIO, ICICI Prudential Mutual Fund, advises investors to be cautious on small-cap stocks and opt for large-cap funds.
- Swarup Mohanty, vice chairman, Mirae Asset Managers India, expects lower interest rates and lower commodity prices to benefit India, and advises investors to diversify their portfolios.
- Maneesh Dangi, chief executive officer, Mosaic Asset Management, is betting on survival rather than growth and expects a decent opportunity to dial up risk in six to eight months.
| Asset Manager | Assets Under Management (AUM) | Recommendation |
|---|---|---|
| Rajeev Thakkar | 1 trillion rupees | Bargain buys in well-run companies with beaten-down prices. |
| Sankaran Naren | 8.53 trillion rupees | Large-cap stocks are relatively more appealing than they were in September 2024. |
| Swarup Mohanty | 1.80 trillion rupees | Lower interest rates and lower commodity prices will benefit India, and investors should diversify their portfolios. |
| Maneesh Dangi | 45 billion rupees | Super-local companies and credit investment opportunities lie in mid-sized housing firms, small financiers, and utilities. |
The Indian Economy: A Mixed Bag
The Indian economy faces endemic weaknesses, including high consumption-oriented stocks and the threat of dumping from China. However, there are also opportunities for growth, such as a more stable currency and declining interest rates.
Challenges Ahead
Despite the positive market environment, the Indian economy still faces challenges, including high inflation, a large fiscal deficit, and a high dependence on exports.
Investor Advice
Investors should be cautious and diversify their portfolios, taking into account the current market environment and the economic uncertainties.
Expert Insights
“Expect Indian equities to do meaningfully better than fixed income securities over a three- to five-year horizon with approximately an average 12% annual return,” said Rajeev Thakkar, chief investment officer, PPFAS Mutual Fund.
“We are seeing a revival of foreign portfolio flows, and we expect this to continue, which will help to support the Indian economy,” said Sankaran Naren, CIO, ICICI Prudential Mutual Fund.
“The trade war is an inverted version of the Covid crisis, prompting a positive supply shock and a negative demand shock, which will squeeze corporate profit margins, but across most large companies leverage is low, creating a margin of safety for credit investments,” said Maneesh Dangi, chief executive officer, Mosaic Asset Management.
Conclusion
The cancellation of US tariffs has sparked a big rally in the US stock market, and Indian markets may see gains on Friday.
