New Delhi/Washington: Amid fears of recession in the US amid tariff war, a question that’s bothering many is that how Indian investors should react to such a scenario? According to analysts, Indian investors have to be cautious, but should not panic. Instead, analysts claimed that this market environment was ideal for starting investments through SIPs in mutual funds. Moreover, they suggested that Indian investors should avoid IT and metal stocks as of now. They rather advise Indian investors to focus on FMCG, pharma and finance.
“Amid ongoing fears of a recession, Indian investors are advised to stay cautious but not panic. It’s important to maintain a balanced approach in the current market scenario,” Swapnil Aggarwal, director of VSRK Capital, told News 18.
“For long-term diversification, Nifty Junior (Nifty Next 50) and Nifty ETFs are good options, although they may witness some short-term volatility. This market environment is ideal for starting investments through SIPs in mutual funds, which can help navigate volatility and build wealth steadily over time,” the expert added.
Vinod Nair, head of research, Geojit Investments Ltd, also told News 18 that after the imposition of higher-than-anticipated tariffs by the US, sectors like IT and metals have underperformed.
Know What has JP Morgan predicted about US economy
JPMorgan Chase & Co. has predicted that the United States will enter into a recession this year, largely due to the impact of new tariffs announced by President Donald Trump, according to reports. The reciprocal tariffs announced by Trump have also raised fears of global recession. This comes amid a strong market crash.
“We now expect real GDP to contract under the weight of the tariffs, and for the full year (4Q/4Q) we now look for real GDP growth of -0.3%, down from 1.3% previously,” the Bloomberg reported, citing JPMorgan Chase & Co chief US economist, Michael Feroli.
“The forecasted contraction in economic activity is expected to depress hiring and over time to lift the unemployment rate to 5.3%,” Feroli added.
What are experts saying?
“We are rapidly headed towards recession,” Peter Tchir, head of macro strategies at Academy Securities told Bloomberg. “The world was prepared for ‘reciprocal tariffs.’ Whatever the abomination that was launched at the Rose Garden was, it is a disaster — mostly for the US, but also for the global economy,” Tchir added.
“If the 25% tariff is fully implemented quickly and largely maintained, and U.S. trading partners retaliate approximately tit-for-tat, the U.S. and global economies will not suffer a depression, but they will suffer serious recessions,” Mark Zandi, Chief Economist at Moody’s Analytics wrote on X.
“The recession will hit imminently and extend until next year. Real GDP will fall close to 2% peak to trough, and unemployment will increase from its current 4% to 7.5% at its peak next year. I attach a 15% probability to this dark scenario,” Zandi added.
Trump’s tariff war with China
On April 2, Trump announced to impose a 10% baseline tariff on all imports. Separate rates were announced for certain trading partners. As a retaliatory measure, China on April 4 announced to impose an additional 34% tariff on all goods imported from the US. Reacting to this, Trump announced to impose 34% reciprocal tariff on China.
“China Played It Wrong, They Panicked – The One Thing They Cannot Afford To Do!” said Trump in his social media post on Truth Social after China’s retaliatory tariff announcement.
How did US markets react?
The S&P 500 lost 6 per cent after the announcement made by China. This was the worst week closure for the S&P 500 since March 2020 pandemic that ripped through the global economy. The Dow Jones Industrial Average fell 2,231 points or 5.5%. The Nasdaq composite also plunged. According to reports, US Stock Market wiped out over $5 trillion in Trump’s tariff war.
