Indian stock markets demonstrated impressive resilience on Thursday, bouncing back from initial declines spurred by new tariff announcements from the U.S. The Sensex soared nearly 700 points from its intraday low, while the Nifty jumped 160.7 points, climbing to 23,306.50. This recovery was primarily driven by a surge in pharmaceutical stocks and a decline in crude oil prices, which helped mitigate the initial market sell-off triggered by President Donald Trump’s recent tariff measures.
U.S. Tariff Announcement Sends Shockwaves
On April 2, 2025, President Trump introduced a new tariff initiative named “Liberation Day,” designed to address trade imbalances. This strategy imposes a blanket 10% tariff on all imports, taking effect on April 5, with country-specific tariffs starting from April 9. India, in particular, was hit hard, facing a significant 26% tariff on its exports to the U.S.
The announcement initially rattled investors, causing concern as the market reacted negatively. However, the broader market soon stabilized, buoyed by the exemption granted to Indian pharmaceutical exports, providing a much-needed cushion against the tariffs.
Expert Insights on Navigating Market Volatility
Prominent financial experts shared their strategies for investors to traverse this turbulent market landscape effectively.
Diversification is Essential
Chethan Shenoy, Director & Head of Product & Research at Anand Rathi Wealth, emphasized the importance of diversification. While India is impacted by the tariffs, Shenoy pointed out that the country is not excessively reliant on exports, offering some protection against these changes. He suggested maintaining a diversified investment portfolio with an allocation of 55% in large-cap stocks, 20% in mid-caps, and 25% in small-cap stocks. "A diversified strategy across various asset classes will help investors weather market fluctuations while striving for their return goals," Shenoy stated.
Seize Opportunities During Dips
Nitin Rao, CEO of InCred Wealth, noted that global markets are transitioning into a new economic paradigm. He anticipates ongoing volatility; however, he believes that significant market corrections could provide appealing buying opportunities for risk-tolerant investors. "Markets will adjust to these changes, influencing both sentiment and earnings. At times, steep declines could serve as excellent entry points in this evolving economic landscape," Rao remarked.
Long-Term Outlook and Caution
Sonam Srivastava, Founder and Fund Manager at Wright Research PMS, warned that immediate volatility is likely as increased input costs around the world could drive U.S. inflation higher, potentially delaying anticipated rate cuts by the Federal Reserve. "Equities may struggle, especially sectors sensitive to global trade dynamics," she cautioned. Nonetheless, she believes that trends toward de-globalization and the establishment of bilateral trade agreements might position India as a strategic partner in global commerce.
Srivastava advised investors to remain vigilant, focus on high-quality stocks, and keep an eye on macroeconomic indicators, particularly regarding retaliatory trade actions and Federal Reserve policies.
Conclusion: Market Resilience Amidst Challenges
In conclusion, while the U.S. tariffs sparked initial turmoil in the markets, the robust recovery of the Sensex and Nifty indicates that investors are beginning to adjust to the implications. The exemption of Indian pharmaceutical exports from the tariff increase offered necessary relief, and falling crude oil prices contributed positively to market sentiment.
Experts agree that diversification and a focus on high-quality investments are prudent strategies in this current environment. Though short-term fluctuations are expected, investors with a long-term perspective may uncover selective opportunities as the global trade landscape continues to evolve.
