Nifty On Gradual Dip: Focus On Tariff-Proof Sectors For Long-Term Gains
The Indian stock market has been experiencing a gradual dip, with the NSE benchmark Nifty 50 showing a weak momentum. According to V.L.A Ambala, a SEBI-registered Research Analyst, investors should focus on domestic cyclicals and monopoly players for the next one year.
Current Market Scenario
The Indian stock market snapped a six-week losing streak ahead of India’s Independence Day 2025, buoyed by robust domestic inflows and strong macro indicators despite geopolitical headwinds. However, the latest quarterly earnings growth came in mixed, which has weighed on sentiments.
S&P’s recent upgrade of India’s sovereign credit rating to BBB is expected to boost investor sentiment and support growth. The Nifty 50 has gained nearly 490 points in the last one year, but the current market scenario is marked by caution due to the ongoing US-India trade deal negotiations.
Impact of US Tariffs on Indian Stock Market
According to V.L.A Ambala, the US trade tariffs can dampen broader investor sentiment if they are targeted toward sectors where India is engaged in exports. This could act as a blow to the earnings of affected companies and tip the scales of global trade flows.
However, India’s direct export exposure to the US is not as high as that of some Asian peers. The market sentiment is mostly driven by global risk-off moves, and the Nifty is showing a YTD gain of 4.10% and a 2.5% gain on a YoY basis.
Key Factors That Have Moved Indian Markets
Several factors have driven the Indian markets in the last one year, including global cues such as the US Fed’s interest rate stance, US inflation trends, and crude oil price spikes. The earnings season has also been a significant trigger, with mixed corporate results and mounting pressure on IT and export-oriented sectors raising concerns.
Domestic manufacturing and auto sectors have demonstrated resilience, while FII and domestic inflows have remained a major talking point throughout the year. Geopolitical tensions, particularly the conflict in the Middle East and shifts in trade dynamics, have periodically hampered market sentiment.
India Inc.’s Earnings Growth
Weaker global demand and pricing pressure in IT and pharma exports have dented India Inc.’s earnings growth. The Nifty companies’ EPS growth is now projected around 9% to 10%, which is below previous expectations of 14% to 15%.
Headwinds such as tariffs and commodity volatility could cap export earnings and weigh on the upcoming financial year’s growth prospects. However, defensive stocks such as FMCG, utilities, and healthcare, along with domestic cyclicals like infrastructure, capital goods, and cement, are well-positioned in the current environment.
Top Bets for Investors
V.L.A Ambala recommends investing in monopoly players and tariff-proof stocks such as CDSL, MCX, and Larsen & Toubro. He also suggests adopting a sell-on-rise strategy near Nifty’s resistance levels of 25,200 and accumulating in phases near support levels of 23,200–23,600.
Investors should avoid heavy allocations at weak support zones if they are considering fresh investments in ETFs. From a sectoral perspective, V.L.A Ambala recommends allocating 30–35% to defense, around 40% to quality domestic cyclicals with high dividend growth, and maintaining a small exposure of 10–15% in high-growth midcaps.
Top Five Stock Picks
V.L.A Ambala’s top five stock picks for the next one year are Adani Green, Refex, CDSL, CEAT Ltd., and Aarti Industries. Investors should conduct thorough due diligence to ensure these stocks are a good fit for their portfolio objectives and risk profile before investing.