Domestic Bets Dominate Amid Global Trade Uncertainty
As global trade risks intensify ahead of the April 2 U.S. tariff decision deadline, India’s portfolio management service (PMS) managers are reassessing their strategies. While markets initially rebounded from the steepest small- and mid-cap correction since the pandemic, momentum is fading, and investor nervousness is resurfacing. How are PMS managers navigating this uncertainty? Conversations with five key players reveal a shared focus: prioritizing domestic businesses and exporters with strong competitive advantages that can endure tariff pressures.
Marcellus Investment: Quality Over Speculation
Pramod Gubbi, founder of Marcellus Investment, maintains a stock-specific approach. “As bottom-up investors, we focus on individual stocks rather than speculating on broader market movements,” he explains. His team analyzes company-specific impacts, particularly in the context of India’s cyclical slowdown.
Despite a slight correction, valuations remain high, with FY25 earnings growth expected in the mid-to-high single digits. Financials remain a core focus. “They’re still reasonable compared to other sectors,” Gubbi notes, citing HDFC Bank, ICICI Bank, and Bajaj Finance as key holdings.
Gubbi warns of a slowdown in government-led capital expenditure, which could impact sectors reliant on state spending. He also sees signs of cooling urban middle-class consumption. Regarding small- and mid-cap stocks, he believes the market is overlooking slowing earnings growth, cautioning against excessive liquidity and artificial demand from mutual funds.
On IT, he acknowledges near-term headwinds from delayed discretionary spending and U.S. economic concerns but remains optimistic about long-term fundamentals. Marcellus holds select positions in large-cap names like HCL Tech and L&T while maintaining an underweight stance on the sector overall.
360 ONE Wealth: Defensive Domestic Plays
Umesh Agrawal of 360 ONE Wealth takes a cautious approach, avoiding aggressive accumulation as corporate earnings remain muted. “There’s no rush to accumulate positions,” he says, preferring sectors with strong domestic demand that can withstand global uncertainty.
He is particularly bullish on domestic healthcare and consumer electronics manufacturing, industries relatively insulated from trade disruptions. Agrawal is also exploring opportunities in the circular economy and precision engineering, favoring companies with profitability and low debt.
Emkay Investment Managers: Are Tariff Fears Overblown?
Kashyap Javeri of Emkay Investment Managers believes tariff concerns are less severe than anticipated. “The tariffs will likely be implemented, but they’ll be more measured than most expect,” he predicts. He sees auto ancillaries and pharma CDMOs (Contract Development and Manufacturing Organizations) as well-positioned to withstand trade pressures.
Javeri argues that U.S. manufacturing struggles to compete with India, particularly in auto ancillaries, where supply chains are inelastic. He is selectively adding high-quality mid-cap stocks that have corrected sharply, advocating patience and strategic accumulation.
Motilal Oswal: Domestic-Facing Sectors in Focus
Prateek Agrawal, MD and CEO of Motilal Oswal, emphasizes a strategy centered on India’s economic trajectory rather than external risks. “We’ve intentionally avoided export-heavy sectors,” he states, favoring healthcare, airlines, renewables, and defense—industries driven by domestic demand with minimal tariff exposure.
His approach is in line with the firm’s QGLP (quality, growth, longevity, and value) philosophy, which targets companies with strong fundamentals and sustainable growth. “We don’t need to change much. Our portfolio is already focused on quality,” says Agarwal.
Generational Capital: Betting on Brand Power
Satvik Jain of Generational Capital is capitalizing on India’s growing consumption trend. “In a market like India, where consumption is on the rise, you can’t go wrong with strong consumer brands,” he says. Jain is backing companies such as V2 Retail, Ethos, and Varun Beverages, which are insulated from tariff risks and poised for domestic growth.
He is also exploring pharma and tech opportunities, particularly firms with niche focus areas. “I’m looking for companies that have built strong foundations and have a clear growth trajectory,” he explains, favoring domestic pharma brands and Ayurveda-based businesses experiencing increasing consumer interest.
Conclusion: A Shift Toward Resilience
With global trade uncertainty escalating, India’s PMS managers are gravitating toward domestic plays and resilient exporters. While some see tariffs as less of a threat, most agree that focusing on quality businesses with strong balance sheets and sustainable demand will be key in navigating the evolving market landscape.
