Trump Tariff Hike: Emkay's Manish Sonthalia Expects A Downward Revision
The market veteran also believes that corrections in the market, if any, will be opportunities to buy.
The Indian markets don't need to worry much about US President Donald Trump hiking trade tariffs to 50% from the already announced 25% on Aug. 1, according to market veteran Manish Sonthalia.
Sonthalia, director and chief investment officer at Emkay Investment Managers points out that in the long term, the tariffs are expected to go down and have a diminished impact on the India story.
A quick recap? Trump stacked an additional 25% tariffs on India for the purchase of Russian crude oil on Wednesday. The US President signed an executive order mandating the imposition of additional import levies.
"I find that the Government of India is currently directly or indirectly importing Russian Federation oil," he stated in the order from the White House website. This additional 25% tariff will come into effect from Aug. 27, bringing the rates up to 50.
Why And When Tariff Rates Will Down
"A known uncertainty is better than an unknown uncertainty. Now it is a known uncertainty and it is not 25% base case but 50%. We have to look into the future and assume that these tariffs are not going to stay at these levels and likely to come down in the future because US has got significant investments into India, in the area of electronics, manufacturing, auto components and more," he said.
Sonthalia expects the rates to go down in the medium term and is also looking to buy at this point of time.
Probably in the next three or four months, these tariff will broadly come down to what other countries will be paying.Manish Sonthalia, Emkay Investment Managers
The market veteran also reckons that a lot of uncertainties have already been priced in. "I would look to buy these markets, I don't think there too much left on the table as well as far as uncertainty goes," he explained further.
Risk Off Mood And Mitigating Impact
As far as finding the right bets in the risk-off mood goes, Sonthalia picks the domestic focused areas.
"You should be focusing on areas of domestic presence as opposed to exports. But nothing swings the needle significantly in terms of swinging the needle from a bullish stance to an extremely bearish one because these numbers have come through," he said.
Measuring the impact of these tariff rates and numbers on India GDP, the expert said that the
There could be a second order impact because exports and manufacturing is important. Direct impact now is half a percentage point on the GDP, that could be mitigated by policy from the Central bank.
