'Indian Markets Factored In Worst..': D-Street Expert Eyes Volatility On Trump Tariffs—But With Silver Lining

Trump Tariff Impact: The Indian stock market snapped a four-month winning streak on July 31, on a knee-jerk reaction after US President Donald Trump imposed a tariff of 25% on India starting Aug. 1. D-Street experts believe that the market will not see 'any major reaction' over the tariff announcement. Investors viewed the US tariff threat as a pressure tactic and hoped for lower rates once negotiations conclude.

On Wednesday evening, Trump announced the tariff rate in a post on Truth Social that India will also pay a penalty for its purchases of Russian military equipment and Russian energy. The tariff rate is being negotiated from both sides and the India-US trade deal has not been finalised yet.

In the current market scenario, Vaibhav Sanghavi, CEO, ASK Hedge Solutions told NDTV Profit in an exclusive interview that the 'worst possible outcome' for the Indian market is on the table after Trump's 25% tariff jolt. Sanghvi also does not view 'any major reaction' as a result of the tariff and eyes a 'decent' deal when finalised over the next 60-90 days.

Vaibhav Sanghavi told NDTV Profit that he eyes only some 'short-term volatility' on the downside as a result of the impact of tariff announcement on the Indian stock market. "I don't see much of a reaction coming from the Indian market perspective because of this event. It's more important to monitor what's happening in China," Sanghavi said, predicting a possibility of a shift of foreign fund inflows from India to China.

"The Indian stock market, from a sentimental-impact perspective has already factored in the worst of the outcome," said the D-Street expert. Sanghavi highlighted that 'all major events' are behind us, pointing to the tariff rate decision and major geopolitical headwinds.

Amid the current volatility, the expert also highlighted a silver lining for investors. "The Indian market may even see a positive reaction if the tariff rate is suspended or lowered, depending upon how the negotiations take picture in the next 60-90 days," said Sanghavi.

According to the market expert, Inc Inc has reported a diverse set of earnings in the April-June quarter of fiscal 2025-26 (Q1FY26), with weaker results in IT pack. "Some asset quality concerns were seen in few select banks and NBFCs, but larger private banks have given a good picture," he said.

After India-US trade deal negotiations, the Indian IT companies may see some discretionary spends coming back over better deals. "The IT sector is fluid so we are still neutral. We are positive on large private banks," he said. Sanghavi remains optimistic on Q1 earnings and eyes a double-digit growth.

On the pharmaceutical sector and its related tariff rate, the market expert said that the US will not antagonize its own citizens by making medicines expensive. "Even if the pharma sector gets affected, it might be the last to gets affected. The tariff rate shouldn't be too high," he said. The expert believes that pharma is a sector which may be "insulated from the impact just like the IT services sector."