Trump Tariffs To Have Limited Impact On Listed Universe But Could Hit Consumption, Says This Analyst

The United States' imposition of 50% tariffs on Indian imports will not result in a direct and heavy impact on earnings in the listed universe, according to Ajay Srivastava, managing director at Dimension Corporate Finance Services Pvt.

In a conversation with NDTV Profit, Srivastava said, "Listed universe is not so much directly impacted compared to the vast majority of SMEs, unlisted companies, which are underpinnings of the Indian economy."

On Wednesday, a total of 50% tariff on Indian imports to the United States came into effect, following which the domestic market saw heavy volatility on Thursday.

Srivastava said listed companies, including the one with high exposures to tariff like automobile or pharmaceutical companies, will sit out any impact by and large but an impact on SME and unlisted segment is likely to be translated into lower consumption story. However, he said it will all unfold over a period of time.

"Optimism around GST cut will get tempered by the tariffs," said Srivastava. He further added that tariffs are going to impact the consumer euphoria story much more than the listed universe story because they are insulated.

The impact on the consumer space is likely to be seen in the next two months as the consumption drops, the unsecured loans start to soar up and so on, he added.

However, on the corporate side, Srivastava said if tariffs stay, then earnings cuts could continue, which seems to be a logical extension of a fallen GDP at the end of the day.

On the market side, Thursday saw a volatile trade as the investors priced in the 50% tariff. Both Nifty 50 and Sensex declined nearly 1% only to rebound later but still trade lower for the day.