On April 7, the Indian equity markets experienced a sharp correction of around 3 percent, sparked by reciprocal tariff announcements by the US on April 2. The chain reaction of countermeasures from China and other nations further intensified investor fears, leading to a broad-based global sell-off.

This sudden correction has put fund managers on edge, as many now believe we are entering an unprecedented global trade environment.

Fund Managers Call the Situation ‘Unprecedented’

According to Christy Mathai, Fund Manager at Quantum AMC, the tariff war initiated by the US, particularly commentary from former US President Donald Trump, has reshaped how global businesses engage in trade. Mathai believes this is not just a passing phase, but something that could require corporates to reevaluate their long-term trade strategy with the US and other nations.

“The entire trade setup will need to go through a period of rethinking,” said Mathai.

Concerns of a Global Recession Emerge

Rajesh Bhatia, CIO at ITI AMC, expressed deep concern over the impact of these developments on global economic stability.

“This could lead to a global recession, not just in the US,” Bhatia noted, highlighting the increasing fear of broad-based economic fallout from the current geopolitical tensions.

India’s Fundamentals Remain Robust Despite Global Chaos

Amid the global panic, A Balasubramanian, MD & CEO of Aditya Birla Sun Life AMC, remains optimistic about India’s domestic resilience.

He emphasized that India’s fundamentals are still strong and the country is likely to be less affected by the direct consequences of tariff shifts. Importantly, declining oil prices could reduce inflation, opening the door for rate cuts, which would in turn support future economic growth.

“India could be insulated from global shocks due to our domestic strength,” Balasubramanian stated.

Has the Market Bottomed Out? Uncertainty Prevails

Many investors are now wondering whether the recent dip marks the bottom of the market or if more pain is ahead.

Anish Tawakley, Co-CIO (Equity) at ICICI Prudential AMC, said that while the volatility is mainly global, it's too early to declare a market bottom.

“The environment is still uncertain,” Tawakley warned.

Echoing similar sentiments, Rajesh Bhatia added bluntly:

“Anybody who tells you the market has bottomed is either lying or a fool.”

However, Balasubramanian offered some hope, suggesting that market corrections of this magnitude tend to be short-lived, especially when supported by strong domestic fundamentals and proactive policy responses.

Opportunities in Large-Cap Stocks Emerge

Even amid the market correction, fund managers are turning selective and finding value in large-cap stocks. According to Christy Mathai, many large-cap names were already attractive prior to the tariff chaos.

Tawakley further noted that large-cap valuations have become compelling, while also cautioning about smallcaps due to their higher volatility and risk.

This trend suggests that institutional investors are preparing to deploy cash when opportunities align with fundamentals, not just sector-wide momentum.

Sectors Fund Managers Are Watching

Despite the uncertainty, some sectors continue to shine. Fund managers are particularly optimistic about domestic cyclicals, such as:

• Automobiles

• Financials

• Industrials

• Capital Goods

Anish Tawakley believes these segments are well-positioned to generate healthy returns given their strong domestic orientation.

Private Banks and Selective IT Stocks Find Support

Private sector banks are another area of interest. As per Mathai, these banks have limited international exposure, making them less vulnerable to global trade risks.

In contrast, headline sectors like IT and pharma face challenges. However, Mathai believes that at the right price points, these sectors can still attract buyers, especially when free cash flow (FCF) yields improve to 3–5 percent.

“Once FCF yields hit attractive levels, buyers will step in aggressively,” he added.

Domestic Themes Remain a Long-Term Play

Nilesh Shah of Kotak AMC continues to bet on India’s domestic consumption story. He sees strong potential in:

• Cement

• Building Materials

• Consumer Discretionary

These sectors stand to benefit from recent tax rebates, falling EMIs due to lower rates, and the implementation of the eighth pay commission recommendations, expected next year.

“Consumption will get a big boost from structural and fiscal tailwinds,” Shah concluded.

Conclusion: Brace for Volatility but Stay Optimistic on India

While global tariff tensions and recession fears are causing turbulence in markets, India stands out due to its domestic strength, declining inflation, and a supportive policy backdrop.

Fund managers remain cautious in the short term, but are selectively deploying capital in sectors and stocks that align with India’s long-term growth narrative.

As the dust settles, this correction could offer attractive entry points into resilient sectors and fundamentally strong companies.

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