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Below the Perspective  on US Tarriffs impact on sectors and Indian Economy and investment advisory by Dr. Vikas Gupta, CEO and Chief Investment Strategist at OmniScience Capital

What is already known is already incorporated. Most of the precise impact on specific company cannot be exactly determined, since companies can choose to shift their manufacturing bases to other countries from which the tariff impact could be lesser. All of this is probably already under plans or consideration. Also, still a lot of information will come out over the next few days in terms of specific impact on a specific product from a specific company. Also, information from each company as to how they are going to counter this will also start emerging. It will not necessarily be announced openly and hence sometimes there will be rumours.We would caution investors NOT to reach to news or rumours. Expect Mr. Market to keep changing views on specific companies on a daily basis as the impact of tariffs and the impact of responses from the company’s promoters to counter it with strategic or tactical actions to reduce the impact on their revenues and earnings emerges.

So we hold the view that one should rather focus on companies which do not have much exposure to US and find supernormal companies which will become available at supernormal prices due to the market uncertainty. Impact on US is likely to be inflationary. Not necessarily as result of “earlier cost + tariff”, which can be countered through reduced taxes for citizens or subsidies to local products, but because of supply chain bottlenecks at the customs. Since it is unclear how this will be implemented and if the US customs has the manpower to process multiplea prducts from multiple countries. We think the supply chain bottlenecks created by this could be quite cumbersome and result in inflation in the US.

Also, the question is does the US have enough qualified negotiating teams to reach agreements with multiple countries at the same time. So it will become high priority discussions with larger trade partners and others will be delayed significantly. So we are of the view that it would be best to take benefit of lower prices in the stock market while all this is going on. But no knee-jerk reactions. Analyze and proceed.

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