Trump Tariffs' Hit On Currency Markets Key Area To Monitor, Says Axis AMC's Ashish Gupta

The global investment landscape has been thrown into uncertainty following US President Donald Trump's tariff announcement on Wednesday. While markets scramble to price in the immediate effects, Ashish Gupta, Chief Investment Officer at Axis AMC, warns that the real impact will unfold over time, extending beyond equities into currencies and geopolitics.

“There are going to be second- and third-order impacts of this in the realm of not just economics but in geopolitics. Countries will look to realign themselves, and there will be an impact not just on equity markets. I think currency market impacts are probably the biggest area to watch out for because historically, there are big changes to trade patterns. There are big changes on the currency side, and we have not seen any of that yet,” he told NDTV Profit.

Gupta predicted a period of high uncertainty after Trump's latest move.

“It is going to be a high period of uncertainty. I don't think the right strategy to follow at this point is to just pick out winners or losers from any announcement that is made. You need a balanced, diversified portfolio and try to manage the volatility through it,” he said.

Gupta's comments came a day after the US imposed a 26% "discounted" reciprocal tariff on India and similar measures on over 180 other countries.

 In a White House press conference on Apr. 2, Trump defended the decision, citing the growing trade imbalance hurting the US economy. He blamed India, China, and other nations for "currency manipulation and trade barriers". The US president also claimed his move would "liberate" America and restore its wealth.

Gupta believes the full repercussions of these measures will take time to materialise and could evolve as bilateral negotiations progress.

Emphasising a long-term perspective, he cautioned against knee-jerk reactions to tariff-related headlines. He expects modifications to the announced tariffs and anticipates a prolonged phase of market volatility.

“Typically, when there is a risk-off trade globally, it is a flight to safety; you see the dollar strengthening. People take the dollar trade as a safe-haven trade. But if you see, the dollar index is down below 102 now. We have to be very careful of trying to have a very skewed portfolio in times like this. I think top-down theme-based investing is going to be difficult,” he said.

 “I think theme-based investing worked in the last three, four years, but in the upcoming twelve months, I don't think it will be theme-based top-down investing that will work,” the Axis AMC official added.

On sectoral positioning, Ashish Gupta acknowledged the sharp pullback in Indian equities but pointed out that domestic players are not immune to the broader turbulence. The real estate sector, despite its long-term growth potential, has faced near-term challenges amid market uncertainty, he mentioned.

“If we look at other segments of the market, financials is one area where the balance sheets are very, very healthy. Some of the concerns that were coming from the retail asset quality have also started receding, and the regulatory outlook has improved significantly both in terms of the kind of sanctions that were being put on the various lenders and the aggressive liquidity infusion that has happened.

That is one space we like. Power is a sector that we like. Both the energy transition and the demand-supply dynamics mean that this sector will have favourable tailwinds,” he explained.

With markets in flux, Gupta reiterated the need for a well-diversified portfolio, cautioning against narrow, theme-driven investing in the current environment.