Navigating market volatility: What should be your investment strategy amid US tariffs? Experts advise

Indian benchmark indices, Sensex and Nifty, staged a strong recovery on Thursday, erasing early losses triggered by US tariff concerns.

The Sensex rebounded nearly 700 points from its intraday low, while the Nifty gained 160.7 points to touch 23,306.50. The recovery was led by a rally in pharmaceutical stocks and cooling crude oil prices, which helped offset the initial sell-off sparked by US President Donald Trump's new tariff measures.

On April 2, 2025, President Trump unveiled a new tariff strategy, termed “Liberation Day”, aimed at correcting trade imbalances. The plan imposes a universal 10 percent tariff on all imports, effective April 5, with country-specific reciprocal tariffs starting April 9. India was among the most affected, facing a steep 26 percent tariff on its exports to the U.S.

While this move rattled investor sentiment in the morning session, the broader market recovered as investors found solace in the exemption granted to Indian pharmaceutical exports.

Expert Insights on Market and Investment Strategy

Top market experts shared their views on how to navigate the ongoing turmoil in the stock market.

Diversification remains key

Chethan Shenoy, Director & Head of Product & Research at Anand Rathi Wealth, noted that while India is impacted by the tariffs, the country is not heavily reliant on exports, which provides some insulation. He advised investors to maintain a diversified portfolio to navigate the volatility, recommending an asset allocation of 55:20:25 in large-cap, mid-cap, and small-cap stocks, respectively.

"A well-diversified investment strategy across asset classes and market caps will help investors withstand market fluctuations and achieve their return objectives," Shenoy said.

Use dips as good entry points

Nitin Rao, CEO of InCred Wealth, remarked that global markets are entering a new economic order, where the US is merely adjusting its policies to match existing tariff structures in other countries. He expects continued volatility in the short term but believes that sharp market declines may present attractive buying opportunities for high-risk investors.

"Markets will have to price in these changes, both in terms of sentiment and earnings. At some point, sharp falls may present good entry points in this new economic order," Rao added.

Long-term opportunities ahead

Sonam Srivastava, Founder and Fund Manager at Wright Research PMS, cautioned that near-term volatility is likely, as higher input costs across multiple geographies could push US inflation higher and delay the Federal Reserve’s anticipated rate cuts.

"Equities may remain under pressure, particularly sectors sensitive to global trade and demand," Srivastava said. However, she believes that the move towards de-globalization and bilateral trade pacts could position India as a neutral, stable, and strategic partner in global trade.

She advised investors to stay cautious, focus on high-quality stocks, and closely monitor macroeconomic developments, particularly any retaliatory trade measures and the Fed’s policy direction.

In summary, while U.S. tariffs created initial panic in the markets, the strong rebound in Sensex and Nifty suggests that investors are beginning to digest the impact. The exclusion of Indian pharmaceutical exports from the tariff hike provided a much-needed cushion, while easing crude oil prices supported sentiment.

Experts believe that diversification and a focus on high-quality stocks remain the best strategies in the current environment. While short-term volatility is expected, investors with a long-term horizon could find selective opportunities as the global trade landscape evolves.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.