Indian Pharma, and two other sectors to perform 'better' than global peers amid Trump tariffs, says Geojit 'Vinod Nair | Einsmark news

Donald Trump described April 2, 2025 – the day’s reciprocal rates were set – as the most important economic liberation day in American history. However, this move was regarded as a worldwide as a regressive step, which was for the international trading system. Since the era after World War II, international trade has expanded significantly as a result of a sustained reduction in tariff barriers. The concept of reciprocal rates stems from an arbitrary methodology to calculate a striking rate on a country is based on the trading deficit with the US. It is apparently cited on the basis of non-financial barriers such as currency manipulation and business extraction to block the market access to the US in the various countries. The world market takes it at a time. Over the past two days, the US market has been 4% lower and Asia has been hit more, with Japan by 10%. India handles it better, considering that the implication of the trade barrier is lower compared to the rest of the world. Like other Asian counterparts, such as China, Vietnam, Taiwan and Indonesia, there is a higher heel of 26 to 46%. Among a fully escalated tariff war scenario, China may face an overall tariff burden of up to 65% under the reciprocal framework, according to ‘The Economist’. India’s relatively better positioning is also attributed to its continued negotiations with the United States to a bilateral trade agreement, which could help reduce the adverse effects of the reciprocal tariff regime. Some sectors such as pharmaceutical, semiconductors and energy -oriented commodity and products are excluded from the tariff measures. This release positions India’s pharmaceutical, manufacturing and energy sectors to perform relatively better than their global counterparts. In a reflection, it is very plausible that domestic oriented industries such as agriculture, FMCG, finance, industrial, infrastructure and cement are safe at the direct impact of tariff effects. Nevertheless, since world markets experience a significant tension, Indian markets are likely to face weakness in the short term. Nevertheless, India is expected to show relatively better performance compared to other major economies amid the global downturn. Despite India’s relative advantage, several Indian sectors with high exposure to the US market are under pressure amid expectation of a slowdown in US demand. The IT sector is particularly affected, as subdued technology spending and increased US interest rates – probably at 4.5%, compared to the lower rate of the EU of 2.5% – weigh on business prospects. Large Indian IT firms earn between 50% and 80% of their US revenue, making them especially vulnerable. While the pharmaceutical sector remains relatively isolated for the time being, other export-oriented industries are holding on to us, such as car supplements, textiles, aquaculture and basmati rice, a greater risk of the developing trading environment. The risk of retaliation measures against the United States is increasing, especially from important trading partners such as Europe, China, Japan and Canada – which exacerbates the economic fall potentially. As the tariff war increases further, the likelihood of a US recession will increase significantly in the coming year. At the beginning of the year, the likelihood of a US recession was 20%, but it has since risen to 40%, reflecting the growing concerns about trade interruptions. Currently, a reciprocal rate of 10% has been set on all US trading partners, a step that is expected to dampen global trade and economic momentum as a result of the increasing challenges for the supply chain. This, in turn, can outweigh future growth in earnings and market valuations. Meanwhile, the domestic Q4 earnings season will begin next week. Expectations remain modest on a YO base, although successive (QOQ) improvement is expected. Economic data indicates a strong setback in economic activity between January and March. Given the high base of the last Q4 of FY25 and a muted estimate of 7% EPS growth for India in the full year FY25, the preliminary estimate for Q4 8-10% Yoy earnings growth is. This is below the long -term average growth rate of India at 15%, which indicates that it will not be taken positively by the market. The effect of this is likely to be weak, given the negative bias under the global emphasis. The result will be initiated by the IT sector, where the estimate and prospects are poor as a result of an outline of the US. The author, Vinod Nair, is head of research at Geojit Financial Services. Disclaimer: The views and recommendations above are those of individual analysts or brokerage companies, and not of currency. We advise investors to check with certified experts before making investment decisions.