According to Gupta, only about 2% of revenues of MSCI India are directly affected by the tariff. “The noise is big, but the direct impact on listed companies is very small. Short-term investors and traders may sell in panic, and foreign portfolio investors (FPIs) could continue selling. But this also opens up buying opportunities,” he explained.
Gupta highlighted that sectors linked to domestic consumption will benefit the most. “The government is using all tools—tax cuts, rate cuts, GST measures, and support for rural demand—to revive consumption. This is positive for consumer tech, autos, building materials, paints, durables, and staples,” he said.
Pockets of value in midcaps & smallcaps
In the case of midcaps and smallcaps, Gupta pointed to several areas of value. He sees strong potential in building materials, domestic pharma, and chemicals. “Plywood, tiles, and paint companies are attractively valued and should benefit from the real estate cycle. Domestic pharma is a sweet spot with steady 15–20% growth potential, while chemical companies have expanded capacities and can deliver strong returns once demand picks up,” Gupta noted.
Most Indian chemical companies primarily export to Europe and the US, while many Chinese firms encounter anti-dumping duties, presenting a significant opportunity. Indian companies have recently completed or are close to finishing capital expenditures, enhancing production capacities. With promising valuations and rising demand, their growth potential relative to trading valuations is attractive, says Gupta.
Despite current volatility, Gupta believes patient investors will benefit from these opportunities. “This is the time to look beyond the noise and focus on sectors where fundamentals remain strong,” he added.
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