The heightened global uncertainty due to the US “reciprocal tariffs” on India may cause near-term corrections and market turbulence, but the long-term outlook remains constructive, market experts said on Thursday.
The US has announced 27 per cent reciprocal tariffs on India, citing high import duties imposed by New Delhi on American goods.
This move aims to reduce the US trade deficit and boost domestic manufacturing under the Donald Trump administration’s economic agenda.
While this development is expected to impact India’s exports to the US, experts believe that India is better positioned than its competitors, who also face increased levies.
Axis Securities said that market volatility is expected to remain elevated in the near term due to the extent of the tariffs, which have surpassed market expectations.
“These measures are inherently inflationary and could complicate the US Federal Reserve’s monetary policy trajectory.
“Furthermore, any escalation in trade disruptions may heighten recessionary risks in the US, leading to a broader slowdown in global economic activity,” the brokerage firm said.
Given the significant influence of the US economy on global financial markets, short-term sentiment is likely to be impacted.
However, Axis Securities sees this volatility as an opportunity and recommends increasing cash allocations by up to 10 per cent and using market dips to systematically build positions in high-quality stocks with strong earnings visibility.
“While heightened global uncertainty may cause near-term corrections and market turbulence, India’s macroeconomic fundamentals remain solid,” Sujan Hajra, chief economist & executive director at Anand Rathi Group, said.
This resilience is further supported by positive signs in the equity markets.
Notably, Foreign Portfolio Investors (FPIs) turned net buyers in the week ended March 2025, infusing nearly Rs 28,000 crore.
This marked the end of a 16-week outflow streak, the longest in 25 years.
Building on this optimism, Hajra said, “With greater uncertainties in the US and China, we expect FPIs to turn more positive on India.
“With resilient corporate earnings, steady domestic flows, and equity valuations below historical averages, the medium- to long-term outlook for Indian equities remains favourable.”
However, the immediate impact of the tariffs is evident in the markets.
The 30-share BSE Sensex settled 322.08 points lower at 76,295.36.
Similarly, the broader NSE Nifty declined 82.25 points to close at 23,250.10.
From an Indian investor’s perspective, the US reciprocal tariffs bring both concern and clarity.
Key export-oriented sectors like electronics, textiles, gems & jewellery, auto parts, and processed foods face headwinds due to steep US duties. However, the pharmaceutical sector — a critical pillar of India’s exports — has been exempted, providing a silver lining.
“This is a major relief, especially since Indian pharma supplies over 40 per cent of the US generic drug demand.
“Along with IT services and select chemicals, these sectors remain outside the tariff drag.
“For India, this split offers an opportunity to double down on sectors like pharma that retain global competitiveness despite geopolitical churn,” said Anirudh Garg, partner and fund manager at Invasset PMS.
In light of these developments, Sonam Srivastava, founder and fund manager at Wright Research PMS, advised investors to remain cautious.
“This is a time to focus on quality investments and monitor macroeconomic trends closely.
“Markets may remain uncertain until there’s clarity on retaliatory measures and the Federal Reserve’s stance,” Srivastava said.
