Portfolio Managers Reassess Strategies as Global Trade Risks Rise
As global markets brace for potential disruptions from U.S. tariff decisions, India’s Portfolio Management Services (PMS) managers are making critical adjustments to their investment strategies. With April 2 set as the deadline for tariff announcements, fund managers are closely analyzing the implications for Indian exporters and the broader market.
After a sharp correction in small- and mid-cap stocks, the recent rebound has provided a temporary sense of relief. However, uncertainty remains high, and PMS managers are adopting a cautious yet tactical approach. Many are now shifting focus to domestic-driven businesses and exporters with strong competitive advantages to mitigate the potential impact of trade barriers.
Highlights:
U.S. tariff decisions could impact Indian exporters and global trade flows.
Small- and mid-cap stocks have rebounded, but concerns about sustainability persist.
Fund managers are prioritizing domestic businesses over external-facing industries.
Marcellus Investment: Focusing on Quality Amid Economic Slowdown
Pramod Gubbi, founder of Marcellus Investment, is maintaining a bottom-up investment strategy, emphasizing fundamental stock selection rather than broad market speculation. His team remains focused on high-quality stocks that can withstand cyclical economic slowdowns.
With FY25 earnings growth projected to be in the mid-to-high single digits, Gubbi acknowledges that valuations remain elevated despite recent corrections. He sees financial stocks as a core investment area, citing companies like HDFC Bank, ICICI Bank, and Bajaj Finance as relatively well-valued compared to other sectors.
However, Gubbi warns about a slowdown in government-led capital expenditure (Capex), which could negatively impact infrastructure-dependent sectors. He also notes signs of weakening urban middle-class consumption, which could affect discretionary spending trends.
While small- and mid-cap stocks have experienced sharp corrections, Gubbi believes further downside is possible, as their earnings growth is slowing. The current rally in these stocks, he argues, may be driven by excessive liquidity and artificial demand from mutual funds rather than fundamental strength.
In the IT sector, Gubbi acknowledges short-term headwinds due to delayed discretionary spending by U.S. enterprises. However, he remains bullish on long-term fundamentals, maintaining positions in HCL Tech and L&T, while maintaining a cautious overall stance.
Highlights:
Marcellus Investment is sticking to high-quality stock selection.
Banking stocks remain attractive compared to other sectors.
Government Capex slowdown and weak middle-class spending are key risks.
Further corrections in small- and mid-cap stocks could be on the horizon.
360 ONE Wealth: Playing Defense with Domestic Growth Sectors
Umesh Agrawal of 360 ONE Wealth is taking a more defensive approach, avoiding aggressive accumulation amid muted corporate earnings. He believes that current market conditions warrant selective investments in resilient domestic sectors rather than high-beta stocks exposed to global risks.
Agrawal is particularly bullish on healthcare and consumer electronics manufacturing, as these sectors face minimal exposure to U.S. tariff risks. He also sees opportunities in the circular economy and precision engineering, focusing on companies with solid profitability and low debt levels.
Highlights:
Avoiding aggressive accumulation due to earnings concerns.
Focusing on healthcare and consumer electronics as defensive plays.
Exploring opportunities in circular economy and precision engineering stocks.
Emkay Investment Managers: Viewing Tariff Risks as Overblown
Kashyap Javeri of Emkay Investment Managers is taking a less pessimistic view of the potential impact of U.S. tariffs. He argues that while new trade barriers could be imposed, they are likely to be less disruptive than feared.
Javeri believes that auto ancillary companies and pharmaceutical Contract Development and Manufacturing Organizations (CDMOs) are well-positioned to withstand tariff pressures. Given the inelastic nature of supply chains, he argues that U.S. manufacturers will struggle to replace Indian suppliers, particularly in OEM-specific production.
Despite recent volatility, Javeri is selectively adding high-quality mid-cap stocks that have undergone sharp corrections. He sees attractive opportunities emerging in fundamentally strong companies, advocating a patient accumulation strategy.
Highlights:
Tariff risks may not be as severe as market fears suggest.
Auto ancillary and pharma CDMO sectors are well-positioned to handle trade pressures.
Selective accumulation of high-quality mid-cap stocks is underway.
Motilal Oswal: Betting on Domestic-Driven Growth Sectors
Prateek Agrawal, MD and CEO of Motilal Oswal, is taking a sector-focused approach, emphasizing industries driven by India’s economic growth rather than global trade conditions.
His firm has deliberately avoided export-heavy sectors, instead prioritizing healthcare, airlines, renewables, and defense—industries that are less vulnerable to external shocks and have strong domestic demand.
Motilal Oswal follows the QGLP (Quality, Growth, Longevity, and Price) philosophy, ensuring that their portfolio consists of companies with robust balance sheets, strong fundamentals, and sustainable growth prospects. Agrawal remains confident in the long-term outlook of domestic consumption-driven sectors and sees no need for drastic adjustments.
Highlights:
Avoiding export-dependent sectors in favor of domestic-focused plays.
Betting on healthcare, airlines, renewables, and defense.
Maintaining a quality-driven investment philosophy.
Generational Capital: Banking on Strong Consumer Brands
Satwik Jain of Generational Capital is aligning his investment strategy with India’s rising consumption story, favoring established consumer brands over cyclical or export-dependent sectors.
He believes that companies with strong brand loyalty and growing domestic demand offer the best long-term prospects. Stocks like V2 Retail, Ethos, and Varun Beverages are among his top picks, as they are relatively insulated from tariff risks and poised to benefit from steady demand growth.
Additionally, Jain is exploring opportunities in pharmaceuticals and technology, particularly firms with niche focus areas. He sees Ayurveda-based businesses gaining traction, driven by increasing consumer interest in natural wellness products.
Highlights:
Focusing on India’s growing consumption-driven sectors.
Backing strong consumer brands like V2 Retail, Ethos, and Varun Beverages.
Exploring niche opportunities in pharma and tech, particularly Ayurveda-based businesses.
Navigating Market Uncertainty with Tactical Positioning
With U.S. trade policy uncertainty looming large, India’s PMS managers are adopting a balanced approach, minimizing exposure to high-risk export sectors, and identifying resilient domestic opportunities. While tariff-related fears remain a key concern, fund managers are focusing on financials, healthcare, consumer goods, and selective mid-cap opportunities to weather the volatility and capitalize on India’s structural growth story.
