3 Banks, Two Pharma And One Telecom: These Stocks Ready To Zoom With Donald Trump’s Tariffs

Axis Securities' recent report on understanding the trump tariffs' impact on Indian markets delves into the unfolding implications of President Trump's reciprocal tariffs, affecting over 180 countries worldwide.

The tariffs, ranging from 10% to significantly higher rates for countries like China (54%) and India (26%), aim to rebalance trade relations but threaten global economic stability.
Impact on Indian Markets and Sectoral Insights

While India faces a 26% tariff, Axis Securities reassures minimal direct impact due to comparable tariffs on other competing nations. The report anticipates challenges in select sectors such as volume and margins but remains optimistic about domestic economic resilience.

‘We believe there is limited direct impact on India as higher tariffs have also been imposed on other competing countries. In the near term, select sectors may face challenges in terms of volume, margins, and growth. Over the next few weeks, it will be crucial to monitor any retaliatory tariffs by other countries and developments in country-level bilateral agreements,’ as mentioned in the report. 

Investment Strategies Amidst Volatility
In response to heightened global volatility, Axis Securities recommends strategic investment approaches. They advise increasing cash positions by up to 10% in the short term, leveraging market dips to acquire stocks in high-quality companies with strong earnings prospects over the next 12-18 months.

‘We recommend increasing cash positions by up to 10% in the short term and utilising any market dips in a phased manner to build positions in high-quality companies with strong earnings visibility, maintaining an investment horizon of 12-18 months,’ as per the report. 

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Sectoral Outlook: Pharma Sector and Beyond
Notably, the pharmaceutical sector emerges as a potential beneficiary, exempt from current tariff announcements. Axis Securities suggests a potential rally in pharmaceutical stocks amidst broader market uncertainty.
 

Domestic Economic Tailwinds: Why India Looks Attractive for FY26
Despite global uncertainties, India's domestic market appears well-positioned for growth in FY26, backed by key economic drivers:

RBI's 50bps CRR cut in December 2024, improving liquidity.
Consumption boosts in the Union Budget, fueling domestic demand.
A likely 25bps rate cut by RBI in February 2025, aiding credit expansion.
Improved liquidity measures, fostering better financial stability.
Given these domestic tailwinds, Axis Securities views India’s economy favourably for FY26, with domestic-facing sectors holding a better risk-reward balance compared to export-driven industries.

Top Stock Picks for Market Resilience
Axis Securities has identified top-performing stocks that are expected to withstand market volatility and deliver strong returns. These include:

Banking & Financials: HDFC Bank, ICICI Bank, SBI, Cholamandalam Invest & Finance
Healthcare & Pharma: Max Healthcare, Lupin
Consumer & Retail: Trent Ltd, Hero Motocorp, Indian Hotels, Varun Beverages
Infrastructure & Realty: Dalmia Bharat Ltd, Kalpataru Projects, Prestige Estates
Telecom: Bharti Airtel
Manufacturing & Industrials: APL Apollo Tubes

Axis Securities maintains its focus on Largecap private banks, telecom, consumption-driven businesses, hospitals, and interest-rate proxies, highlighting their potential to outperform in the near term.

IT Sector Under Pressure: Downgrade Risks Ahead
The report adopts a cautious stance on the IT sector, citing:
A slowdown in US IT spending due to discretionary budget cuts.
Rising valuation risks amidst economic uncertainty.
Increased downgrade risks, especially after the latest tariff announcements.

With overnight Trump Tariff developments increasing the probability of IT sector downgrades, Axis Securities recommends reducing IT sector positions.

How Should Investors Respond?
Axis Securities' report provides a balanced perspective on the Trump Tariff impact, suggesting that while global volatility may rise, India's near-term outlook remains stable.

The key takeaways for investors:
Stick to high-quality, large-cap stocks in domestic-facing sectors.
Increase cash positions and wait for market dips.
Monitor global trade developments and policy shifts.
Remain cautious about IT sector exposure.

As the global economy navigates policy uncertainty and potential trade wars, Axis Securities remains bullish on India’s long-term growth trajectory, urging investors to capitalize on high-quality opportunities amid volatility.