India PlayBook 2025: proposed tariff imposition of the US punishes the Indian market despite resilient economy

Although the global stock markets cheer for conversations between the US and Russia and the last month rise 3% (Central Jul-Mid-Augustustus), the Indian markets have left the world with a large cap with a flat and middle cap that fell 3% and 5% respectively. FIIs who had brought almost $ 4 billion (April-Jun) also became net sellers in the month Jul-Mid Aug.

The most important risk investors have observed about India is 2: 1) the proposed tariff imposition of 50% from the US as a result of the Nexus of India with Russia. 2) The quarterly results of Q1F26 showed a topline growth of 6-7% for the wider index, one of the slowest top line growth in the last 12 quarters.

This suggests a possible continuous delay in B2C consumption, as shown by the growth of the country of the country of 10-11% reduced from a peak of 18-20%. The Indian government has announced radical changes in the GST after 8 years, which should lead to lower prices for mass goods for consumers and propagations.

The Indian markets have had a time correction for more than a year, with the large cap almost flat and center and the small cap 4-5% lower for a year. We believe that there is a reason to go on India for a long time because of the resilient Indian economy and themes that we like on Bottom-Up base include Finnish (Financial + Consumption), Capex & Make in India.

The India-Russia Nexus helps forex reserves and keeps the import account of India low

India sources now almost 38% of its import of crude oil from Russia – an increase of only 2% before the conflict in Ukraine. This shift offers two important economic benefits:

• Cost efficiency: Russian ural crude oil acts with a 10-15% discount for Brent, despite a similar quality. Indian refineries save around $ 7-10 per barrel, which translates into annual savings of $ 4.5 – 7 billion. These savings reinforce the refinement of margins and offset losses in LPG distribution.

• Forex conservation: Russia regulates a significant part of the oil trade with India in INR or other non-dollar currencies. This can be $ 40-45 billion annually, which saves the foreign exchange reserves from India.

Given these benefits, India will probably maintain its energy partner with Russia despite external pressure.

F1Q26 Results-Lapperige Topline and Bottom-Line

Our analysis suggests that the results of the wider index in Q1F26 have led to a growing of 6% a stronger EBITDA growth of 13% due to lower raw material costs and a Pat growth of 7%.

The top line growth was one of the slowest in the last 12 quarters, largely due to a delay in the B2C consumption that is depicted by slow loan book growth of a peak of 20% to 10-12% currently, especially in the retail trade.

The growth for Midcap on Ebidta & Pat level was 18% and 16% higher. We have seen strong growth shoots in telecom, cement, realty and chemical sector.

In an attempt to breathe new life into consumption, the government had already reduced taxes in the recent budget of 3-5% for people who earned less than RS. 25 Lakh. The PM has also announced the restructuring of the GST from 4 plates to a simpler 2 -place structure, along with a higher load for SIN goods such as SUVs, cigarettes, aerated drinks, tobacco etc.

Details of the same will be expected soon, but our estimates suggest RS. 1.5-2 TRN reduction in GST or 0.4-0.5% of GDP. This could revive the much needed thrust in retail consumption.

Interestingly, the government collects a compensation limitation that is estimated around RS. ~ 1.7 Trn that could deny this loss in GST collection. That is why this income reduction from GST should not increase the tax deficit for the government.

Indian opportunities for the bow

Investors can consider concentrating on sectors and themes that offer structural growth and are well positioned to take advantage of current trends and in reasonable ratings:

• Feet: The home financing sector will probably win from increased budgetary assignments and a falling interest rate environment.

Indian capital market players will probably win due to increased liquidity and credit growth.

India’s consumption story has been delayed and here we would bet on bottom-up ideas.

• Capex-linked sectors: Capital goods (infrastructure – cement, ports, pipes, tubes, electricity) are likely to benefit from the government spending that has risen 7 times in 11 years.

• Home Bias Manufacturing and Make in India Themes: Pharmaceutical products and special chemicals continue to offer long-term growth potential that is powered by the domestic demand and export opportunities. The FTA treatment in India and UK on textile also offers American opportunities to concentrate on companies that can increase their exports because of this possibility

(The author is CIO and Head – Equity Advisory, ask private wealth)

Indemnification: The above information and opinion do not constitute investment advice to buy, sell, keep, consult the correct SEBI -registered intermediary friendly before you make investment -related decisions. The opinion expressed above are personal views on the author. The author’s views can also differ from the views expressed by another author of Ask Asset and Wealth Management.